Should we expect lower parts cost because of this?

I did a search around the forum, and I didn't see anybody talking about the VW factory in Chatanooga, Tennessee, announced about a year ago or so.

http://www.autonewscast.com/2009/05/14/volkswagen-factory-in-chattanooga-foundation-for-future-us-strategy/

Other sources claim they'll be sourcing 80% of their parts locally. Should we expect lower parts costs circa 2011?

No, somebody along the supply chain would certainly eat up any available margin. They may create some B.S. scheme to charge more.

IMO, the Chattanoga plant is there to maximize profits and keep costs down to be able to compete with Toyota, Ford, Honda, etc. VW plans to meet their competitors head-on and sell more cars in North America. Also, if a car is built in North America, it won't be charged import duties when it is sent into Canada (don't know 'bout Mexico. NAFTA seems to work more for the benefit of the US more than Canada and Mexico).

So, if they keep their costs (materials and labour) down, they increase profit. On the flip side of the coin, they are more carbon neutral (no need to ship cars from Europe) and employ US citizens.

On having 80% of the parts manufactured from local sources, that's going to be tough as a lot of manufacturing that were once being done within the US are now outsourced to India or China. It would be good to bring back the manufacturing of goods in the US, i.e. would generate more jobs locally, but economically, that seems impossible.

To answer your question, yes, parts will eventually become a bit cheaper if they are of local source. I do not expect them to be lower by that much. It is still a VW part and VW will intend to make more $$ out of it.

AFAIK the TN factory will make the NMS, i.e. the sedan, larger than a Passat, for the NA market. I dunno how much it'll share with the Golf/GTI.

plat said:

To answer your question, yes, parts will eventually become a bit cheaper if they are of local source. I do not expect them to be lower by that much. It is still a VW part and VW will intend to make more $$ out of it.

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Yeah, I guess this makes sense. I guess it also depends on which car they focus on. I think I read, however, that Jetta, Passat and Golfs would be made there.

sfitalianguy said:

AFAIK the TN factory will make the NMS, i.e. the sedan, larger than a Passat, for the NA market. I dunno how much it'll share with the Golf/GTI.

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Yeah, but it wasn't just this car, from my understanding. Where did you read this?