Sources say VW is building an engine plant in Mexico to supply Tenn. factory

Volkswagen AG will announce today its plan to build an engine plant in Mexico to supply vehicles assembled in North America, according to an internal source. A spokesman for the automaker confirmed an announcement will be made, but declined to go into specifics. The plant will supply an existing plant in Puebla, Mexico, and one currently being built in Chattanooga, Tenn.

The new plant in Tennessee is slated to build a new mid-sized sedan early next year, which will be in compliance with the new U.S. emission standards set for 2013.

A Mexican newspaper has confirmed the report, quoting a “˜federal government official”, and saying that the announcement will be made today at the capital”s presidential residence.

On a visit to the country in July, one member of VW Group”s executive council said that the automaker will spend $1 billion in Mexico over the next three years, and that the company was planning an engine plant at an undisclosed location in North America.

– By: Stephen Calogera

Source: Automotive News (Subscription Required)