Move over Detroit. It is northern Virginia’s turn. Volkswagen officials contend that to compete in today’s fast-paced auto industry and grow a US market share, Volkswagen Group of America Inc, which is a wholly owned subsidiary of Volkswagen AG, headquartered in Wolfsburg, Germany, needs aggressive action. The solution: relocate its US headquarters closer to its customer base.
Consequently, in September 2007 Volkswagen announced plans to invest $100m in a new 185,000 square-foot facility in Fairfax County, Virginia. The site will also serve as the US headquarters for Audi of America Inc, Audi Financial Services, Volkswagen Credit and other affiliated operations. It will bring 400 jobs to northern Virginia, including functions related to customer service and sales operations, product strategy, marketing, quality and service, and public relations. Certain call centre and technical functions will remain in Michigan.
“This direction puts a premium on connecting more with our customers, and fostering a culture of fresh ideas and bold thinking,” says Stefan Jacoby, CEO of Volkswagen Group of America Inc. “Virginia is an influential trendsetter. It has great international prestige. It gives us the perfect infrastructure for our new beginning.” To seal the deal, $1.5m was approved from the Virginia Governor’s Opportunity Fund to assist Fairfax County with the project and $4.5m from the Virginia Economic Development Incentive Grant (VEDIG), which is a performance-based incentive.
Detroit, still the centrepiece of the US domestic auto sector, has its attractions, says Mr Jacoby: “Certainly Detroit has good talent, and Michigan is a powerful global centre for the worldwide automotive business,” he says. But Volkswagen has no reason to take advantage of Detroit’s expertise in auto engineering, research and development, and design. Those skills are performed in Germany.
Volkswagen may rank fourth among auto producers in the world and first in Europe, but in Detroit it is small compared to America’s Big Three: General Motors, Ford, and Chrysler. Northern Virginia has one of the highest concentrations of Audi and Volkswagen vehicles in the country and is also known to have higher purchase rates of advanced technology and alternative fuel vehicles. “The Volkswagen Group is taking an inventive approach to sustainable mobility with our fuel and powertrain strategy, and the move will enhance our ability to advance that programme,” adds Mr. Jacoby.
Another strong plus is northern Virginia’s Washington Dulles International Airport, he says. “There’s a lot of back and forth travel to Germany, both for our US and German-based employees.”
A move to Fairfax County gives the company an opportunity to define itself. “Just as California has become home to the largest Japanese car company in the US, our vision is to make northern Virginia home to the largest German car company in the US,” he says. “Growing our sales and business here is a top strategic priority for the entire Volkswagen Group.”
Volkswagen wants to sell 1 million vehicles in the US by 2018. Last year, Audi of America Inc sold 93,506 – a new record – and Volkswagen sold 230,572 units. Both have new products to introduce to the US market in 2008. This brings up another point: Volkswagen is considering US production, although it is too soon to discuss it.
VOLKSWAGEN GROUP OF AMERICA
Relocating from Auburn Hills, Michigan, to Fairfax County, Virginia
Annual turnover (2007):