Volkswagen Introduces Its Made-in-USA Large Crossover

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At the Santa Monica Pier on Thursday, Volkswagen unveiled its largest ever crossover SUV, the Atlas. The seven-passenger sport utility vehicle will be built at VW’s Chattanooga, Tennessee, plant and will be larger than any other VW for sale in the United States. The vehicle is expected to launch in the spring of next year.

Just about a month ago, VW settled a lawsuit related to the company’s diesel emissions scandal with 625 U.S. dealers for a total payment of $1.21 billion, or an average of about $1.85 million each. This settlement came in addition to the nearly $15 billion settlement with U.S. owners of the diesel-powered cars.

U.S. dealers have been hammering on VW for years to build a vehicle to compete for sales with similar vehicles from Ford, GM, Toyota and nearly everyone else.

The catch will be getting the price right. VW tried to impose a so-called near-premium pricing plan on U.S. dealers earlier this year, but the dealers beat back the effort. Pricing for the new Atlas has not been revealed, but one VW dealer told Automotive News, “[T]he Atlas offers better fit and finish and driving dynamics than … [Toyota’s] Highlander and [Ford’s] Explorer, but a pricey sticker will make drawing customers to the showroom difficult.”

If there’s one thing U.S. Volkswagen dealers don’t need, it’s more barriers to attracting customers. The diesel-powered cars were withdrawn from U.S. showrooms last year, and that slashed an estimated 20% of sales.

The Atlas offers two powertrains: a standard 2.0-liter turbocharged and direct-injection TSI four-cylinder with 238 horsepower, or the available 3.6-liter VR6 engine with 280 horsepower. Both come with an eight-speed transmission, and the vehicle can be configured either as front-wheel-drive or with available 4Motion all-wheel-drive in VR6 trims. EPA fuel economy estimates will be released ahead of the launch in the spring of 2017.

VW invested $900 million to prepare its Chattanooga plant for building the Atlas.