(May 24, 2011) CHATTANOOGA , Tenn. — Volkswagen officially opened a new manufacturing plant on a 1,400-acre site here today that will employ more than 2,000 people and build up to 150,000 vehicles a year.

The plant will initially build the all-new 2012 mid-sized Passat sedan.

Volkswagen's $1 billion investment in the new U.S. factory positions the company to boost sales as U.S. auto demand continues to recover from an almost three-decade low.

VW announced it would build the plant in Chattanooga in July 2008, months before the U.S. economy crashed and was smart to continue the project so they could take advantage of the recovery, said Kim Kill, director of sustainability and economic development strategies at the Center for Automotive Research in Ann Arbor, Mich.

"The idea that they're going to be able to localize a significant amount of their volume is going to significantly reduce their costs and dramatically improve their ability to be positioned on a more competitive basis," said Mike Jackson, head of North American vehicle forecasting at IHS Automotive in Northville, Mich.

Volkswagen said 1,700 people are already employed directly by Volkswagen in Chattanooga, and 10,000 additional jobs will be created in the U.S. component supply industry.

Sources: Volkswagen, Bloomberg News