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            june 17, 2019

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VW hints at 2nd plant in US, Ford collaborates avoid tariff hikes


Volkswagen is mulling the possibility of adding a second plant in the US despite not fully utilising its existing factory in Tennessee, according to chief executive officer Herbert Diess, who said his company may also team up with Ford to help build its vehicles in America.
Mr Diess mentioned VW's burgeoning collaboration with Ford following meetings at the White House with peers BMW AG and Daimler AG that were intended to persuade President Donald Trump not to raise auto tariffs, reported Bloomberg.
"We need additional capacity here in the United States," Mr Diess told reporters, adding that the company could use a factory producing a combination of VW- and Audi-branded vehicles. "We might use Ford capacity here in the US to build cars for us."
The White House is striving to reduce a US$30 billion automotive-trade deficit with Germany by ramping up production in the US, the biggest chunk of an overall $65 billion trade deficit with the European Union.
Mr Trump also is smarting from General Motors' decision last week to shut down four US plants and culling thousands of jobs, after he's repeatedly demanded that car manufacturers boost vehicle production in the US.
Ford chairman Bill Ford refrained from explicitly confirming Mr Diess' comments, saying talks with VW are going well but "haven't gotten that granular." Owing to the nature of the German auto leaders' visit to the White House, Mr Diess was trying to show VW's contributions to the US economy, Mr Ford said.
Mr Diess was joined at the meeting by his counterpart at Daimler Dieter Zetsche, and BMW chief financial officer Nicolas Peter.
The carmakers have found themselves in harm's way, with Mr Trump wielding higher tariffs as a cudgel to re-balance trade with both China and the EU. BMW and Daimler are the top car exporters from the US to China, while VW's two most profitable brands, Porsche and Audi, would get hammered if President Trump follows through with a potential 25 per cent levy on imports from the EU.
"That's basically why we are here, to avoid the additional tariffs, and I think we're in a good way," said Mr Diess.
Ford and VW have been in talks about the German automaker investing in Argo AI, the American automaker's self-driving technology partner, to jointly develop autonomous cars, according to people familiar with the discussions. The two automakers also are considering tie-ups to produce electric vehicles and share manufacturing in regions around the world, the sources said.
VW and Ford revealed back in June that they were considering a strategic alliance that would cover a range of commercial vehicles.
"We are in quite advanced negotiations and dialogue with Ford corporation to really build up a global automotive alliance, which also would strengthen the American automotive industry," Mr Diess said.
Daimler, the maker of Mercedes-Benz luxury cars, builds vehicles in Tuscaloosa, Alabama, shipping many of its sport-utility vehicles (SUVs) made there to China. The company employs some 3,700 workers at the US site, which can pump out 280,000 SUVs and sedans.
BMW exported 272,000 vehicles from the US in 2017 - 25,000 more cars than it imported - and is the largest auto exporter by value in the US.
BMW reiterated that it may build a second factory in the US that would make powertrains and supplement its SUV factory in Spartanburg, South Carolina, which is its biggest worldwide. It plans to invest EUR600 million (US$680 million) in the plant by 2021 and create 1,000 jobs.

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