MEXICO CITY (Reuters) -- Volkswagen AG will unveil plans next week to invest around $1 billion in Mexico to expand its Puebla assembly plant, a person familiar with the matter said on Thursday.
The investment, aimed at supporting production of the Tiguan compact crossover, is due to be unveiled on Monday and is expected to generate about 1,900 jobs, the person said.
The current Tiguan is scheduled to be redesigned in 2017 and a long-wheelbase version will be sold in the U.S. market. Volkswagen has only said that the long-wheelbase Tiguan will be assembled in North America, but a source with knowledge of the company’s plans says that the company plans to build it in Puebla.
The Puebla plant already manufactures the Golf compact on the version of VW’s Modular Transverse Matrix platform, or “MQB,” that will also underpin the next Tiguan.
The next-generation Tiguan is a key part of VW’s plan to lift its U.S. sales with a broader SUV and crossover lineup. The Tiguan is slated to arrive stateside in the second quarter of 2017, after VW’s new midsize crossover hits showrooms in the first quarter. The still-unnamed midsize CUV, which will be larger than the Tiguan, will be assembled at VW’s plant in Chatanooga, Tenn., and rides on a different version of the MQB platform than the Tiguan.
As of December, total investment in the auto sector in Mexico had reached $19 billion under President Enrique Pena Nieto, who took office two years earlier, the government says.
Volkswagen, which opened its sprawling Puebla plant in 1964, last year produced 475,121 vehicles out of about 3.2 million autos manufactured in the country, data from the Mexican Automotive Industry Association show.
Mexico is the seventh biggest manufacturer of autos and the fourth largest exporter in the world, according to AMIA. More than 80 percent of those vehicles are destined for sale abroad.
Total auto production increased 27 percent last year, compared to 2013, and AMIA has predicted that Mexico will produce more than 5 million vehicles by 2020.
Ryan Beene contributed to this report.