VW: $1B in Mexico gets new 3-row Tiguan for U.S.

Volkswagen said it will invest $1 billion in its Puebla, Mexico, factory to build a new-design Tiguan compact SUV that, for the U.S., will ride on a long-wheelbase chassis and offer three rows of seats.

About the same time, VW's Chattanooga, Tenn., factory will be ramping up production of a three-row, midsize SUV for the U.S.

Thus, by early 2017 VW should be offering three SUVs in the U.S., two of them new designs with three rows of seats vs. no three-row models now.

The long-lived Touareg will remain a premium, two-row SUV positioned at the top of the company's utility vehicle line in the U.S., VW says.

Volkswagen still will lack a subcompact "city ute" to compete with Mazda CX-3, Honda HR-V, Jeep Renegade, Buick Encore and Fiat 500 X. Nor will VW have a fullsize SUV.

Auto executives are drooling over the city ute segment, which they expect to boom from almost non-existent to 2 million sales a year within a few years.

And buyers are embracing full-size SUVs such as Chevrolet's Tahoe and Suburban.

VW sales are off even as industry sales are rising fast, and it's partly because Volkswagen lacks a full array of the type of SUVs driving other automakers' growth.

VW's Puebla plant said the $1 billion investment will expand and update the factory as well as develop tooling to be used by suppliers to make the new parts. The factory expects to build 500 long-wheelbase Tiguans a day, among other models.

The new Tiguan is based on what VW calls its MQB platform, which underpins the latest generation Golf. Its sales have more than doubled in the U.S., but Golf remains a minor piece of VW's overall U.S. sales.