The man in charge of the factory building the new, US-market VW Passat has explained how it can be sold for around 5000 less than the European version of the car.
The US-market Passat will go on sale from around 13,000 in August. It sits on an extended version of the European car's platform, which makes it 10cm longer, 1.3cm wider and therefore more spacious. Every body panel is different and it has a bespoke interior.
Frank Fischer, head of VW's newest car factory in Chattanooga, Tennessee, where the US-market Passat will be built, said: 'The first thing to be clear on is that there are no compromises on quality. This car has the VW DNA.
'The key to its price is that it is built locally in the US, using US suppliers.
'That has taken a $1 billion investment, but it means we are not exposed to currency fluctuations, the transport costs are relatively low, the raw material costs can be kept down and, here in the US, the labour rates are lower.
'It is also critical remember that the US car buyer has different expectations to a European one. They want to complete their buying experience in a day, and they don't want to personalise their car with lots of options. That means the offering is much simpler in terms of the choice of the model line-up, and there are far fewer driver assistance offerings, which keeps costs down.'
However, despite its low price, VW hasn't fitted a less sophisticated suspension to the American Passat as it did on the US-spec Jetta; instead, it will keep the same advanced multi-link suspension of the European car.
The price advantage is also likely to be down to VW's ambitious growth plans in the US, as it bids to become the world's largest car maker by 2018. It wants to almost triple VW sales by that date in the US, to 800,000 cars a year, and as it seeks to raise volume it is willing to operate on smaller profit margins.