General Motors will be spending $500 million in the U.S. alone to launch its new 2011 Chevrolet Cruze, the company said today.

Most of the dollars involved will go to retooling the Lordstown, Ohio, plant where the Cruze will be built, once the current Cobalt lineup is evicted. That's not expected to happen until after the 2010 model year, since the Cobalt is enjoying a surge in popularity as gas prices remain high.

Fuel economy will be a hallmark of the new car. While today's Chevrolet Cobalt XFE gets upward of 37 miles per gallon, GM's Bob Lutz says the new Cruze could top 40 mpg with a high-economy turbocharged 1.4-liter engine.

GM showed off the Cruze yesterday in high-resolution photos and also showed a mockup of the real car at the announcement of the plant investment. The rest of the world has to wait for the Paris auto show in October to get a look at the Cruze compact.

Europe gets the Cruze next year; we'll have more from the Paris auto show.

Say good-bye to the Jeep Grand Cherokee--at least in its current, stand-alone architecture form.

Both the Detroit News and the Wall Street Journal report today that Chrysler president Tom LaSorda confirms his company will spend almost $2 billion to retool its Jefferson North plant to build a new crossover vehicle.

The $1.8 billion investment will go to develop a new car-based crossover vehicle that will replace the Jeep Grand Cherokee, the Journal quotes LaSorda. The money will go to building a flexible line at the plant and to new tooling, and likely includes development costs for the new vehicle also.

The News adds the vehicle will sport a version of Chrysler's in-progress Phoenix V-6, for better fuel economy.

The current Grand Cherokee rides on its own unibody architecture. What form the new vehicle will take isn't clear, or from what car platform it will be derived, but LaSorda says retooling will be complete by the end of next year and the new crossover will be in production early in 2010.

Volkswagen has chosen Chattanooga, Tenn., as the location for its new U.S. assembly plant, according to TheCarConnection.com sources. We'll be back with more details as they come in.

The official release follows here:

HERNDON, Va. (July 15, 2008) — Volkswagen Group of America, Inc. announced today that it will build a U.S. automotive production facility in Chattanooga, Tenn., where it will produce a car designed specifically for the North American consumer and invest $1 billion in the economy. The announcement is an important element of the company’s overall U.S. strategy of connecting with its customers, increasing its competitiveness and tripling its U.S. customer base in the next decade.

“The U.S. market is an important part of our volume strategy and we are now very resolutely accessing that market,” said Prof. Martin Winterkorn, CEO of Volkswagen AG. “Volkswagen will be extremely active there. This plant represents a milestone in Volkswagen’s growth strategy. We will be selling 800,000 Volkswagens in the U.S. by 2018, and this new site will play a key role. This, along with our growth strategy, is a prerequisite for the economic success of the company in the dollar region. We look forward to establishing an important mainstay for ourselves when we become the biggest European carmaker there.”

“This is a significant step forward in achieving our goals in the U.S. market and a clear sign of the Volkswagen Group’s commitment to the North American consumer. Today’s decision is a fundamental part of our new strategic direction in the U.S. and our five-pillar strategy,” said Stefan Jacoby, President and CEO of Volkswagen Group of America. “Chattanooga is an excellent fit for the Volkswagen culture, having an exceptional quality of life and a long manufacturing tradition.”

The company will build the facility in the Enterprise South Industrial Park, located 12 miles northeast of downtown Chattanooga. The 1,350-acre site is 100 percent owned by the city of Chattanooga and Hamilton County and is certified as an industrial megasite by the Tennessee Valley Authority. Enterprise South is adjacent to Interstate 75. Initial production capacity for the facility is anticipated to be 150,000 vehicles, including a new midsize sedan designed specifically for the North American market. Production is scheduled to begin in early 2011.

“I’m enormously pleased by the announcement from Volkswagen Group of America and grateful for the company’s investment in Chattanooga and in the people of Tennessee,” said Tennessee Gov. Phil Bredesen. “I believe Volkswagen chose Tennessee because of our shared values, our commitment to innovation and our strong respect for the environment. This project will have a significant impact on the economy of Tennessee and the region for decades to come.”

“I couldn’t be more pleased that the spirit of partnership between the state of Tennessee, Volkswagen and the government and business leadership of Chattanooga and Hamilton County has resulted in this significant investment in Enterprise South,” said Matt Kisber, commissioner of the Tennessee Department of Economic and Community Development. “Volkswagen’s investment in this community means the hard work and dedication demonstrated by people at the state and local level to create one of the best business climates in the country is paying off.”

“We started with a vision of transforming an idle Army facility into the source of thousands of family-wage jobs,” said Hamilton County Mayor Claude Ramsey. “Over the last 14 years, I’ve worked with four different city mayors as well as county commissioners, city councilmen and countless others in overcoming barriers and objections to that plan. Today, we stand with our new friends from Volkswagen to make a historic announcement that will create new opportunities for our community for years to come.”

“Volkswagen and Chattanooga have a lot in common,” said Chattanooga City Mayor Ron Littlefield. “Both are serious about environmental sustainability and 21st Century manufacturing.”

Environmental responsibility is a core value of the Volkswagen Group. The company’s focus on sustainable mobility and environmentally responsible manufacturing are right in line with Chattanooga’s strong environmental commitment. As an expression of this shared commitment, the state of Tennessee, Volkswagen and Chattanooga-area organizations are partnering to distribute two saplings for every tree displaced by the project. The new trees will be planted by local school children.

According to United States Sen. Bob Corker, who was mayor of Chattanooga when the city and Hamilton County acquired the land and established Enterprise South as an industrial park, the Volkswagen announcement represents a new chapter in Chattanooga’s success story. “Through twists and turns, our community has maintained focus, invested wisely and exercised tremendous effort and energy in recruiting a major employer to Enterprise South. The breaking of this final barrier and the realization of the vision to which we have held true will take us to levels we can only begin to imagine,” said Corker.

He continued, “Volkswagen is the very best manufacturer and partner we could possibly have in terms of our shared values, and as a result of their enormous investment, not only will Chattanooga be forever changed, but our entire state will reap great benefits from the new suppliers that this facility will attract to the region. I am proud to have been part of a dedicated team that has worked seamlessly on this effort and celebrate this outstanding achievement for our city and our state.”

United States Sen. Lamar Alexander praised Volkswagen’s decision to locate at Enterprise South, saying, “Volkswagen and Chattanooga, the ideal marriage: one of the world's most admired companies and one of America’s most livable cities. This decision keeps Tennessee on the road to becoming the No. 1 state in auto jobs. Congratulations especially to Gov. Bredesen, Sen. Corker and Mayors Ramsey and Littlefield for their leadership,” Alexander concluded.

“Over the past seven months, more than 100 Tennesseans at the local, state and federal level have worked odd hours on short deadlines to help us reach this day,” said Trevor Hamilton, vice president of economic development for the Chattanooga Area Chamber of Commerce. “From this day forward, we dedicate ourselves to partnering with Volkswagen to move from construction to production as quickly as possible. We will unify our team with Volkwagen’s to ensure long-term success for the company, our community and the state of Tennessee.”

With the new plant, Volkswagen will bring about 2,000 direct jobs to the area, and will add a significant number of jobs in related sectors. It is expected that these jobs will come from the tri-state area, pulling from the labor force of Tennessee as well as Georgia and Alabama. Volkswagen of America received an attractive, comprehensive package of incentives for the new facility from Gov. Bredesen’s office and the Tennessee Department of Economic and Community Development. The statutory incentives are tied to job creation and capital investment. Additional support includes assistance for public infrastructure and job training, each designed to ensure the local economy best leverages Volkswagen’s investment to benefit the local work force and ensure the facility’s success.

“This area has a deep base of well-trained labor, with excellent engineering and manufacturing programs at the universities and technical colleges,” added Jacoby. “Thanks to the visionary leaders and people of Chattanooga, we’re confident that the values of this area are compatible with our own, and we envision a long and productive partnership.”

Last year, Volkswagen outlined a new strategic direction in the U.S. based on five pillars: product, brand positioning, dealer network, organization and local production. As it moved forward to assess the potential for local production, the company considered many other site options and earlier this year had narrowed its search to Alabama, Michigan and Tennessee.

“We reviewed three excellent sites, all of which had the specific qualities necessary to build a plant in the United States,” said Jacoby. “Both Gov. Granholm and Gov. Riley were strong advocates on behalf of their states and the citizens they represent. This was a difficult decision, but we look forward to continuing our relationships with both states. I thank both governors and their staffs.”

Despite rumor to the contrary, Toyota says, the Tundra pickup will still be built in Indiana and in Texas.

The Wall Street Journal reported online that the Japanese automaker was considering a consolidation of Tundra production at the new Tundra plant in San Antonio, Texas. Right now the company also builds trucks in Princeton, Indiana.

Toyota has cut production of the Tundra, but it's still among the 20 best-selling vehicles in the U.S. The company issued a statement today that said it has no plans to move the Tundra out of its Gibson Cty., Indiana factory. Toyota said in a release that the "speculation was driven by the current automotive market downturn."

PickupTruck.com says Toyota can build 200,000 Tundras each year in Texas, with another 100,000 from the Indiana plant.

As I read the morning RSS feeds for this blog, I rarely have to clean up after a spit take. But here I am, swabbing down after the latest Automotive News story about Alfa Romeo's return to the U.S.

I refuse to believe Alfa's coming to the U.S., because I was around when they left in 1995, and things haven't gotten better.

There's so much wrong with the logic behind the News story - not the reporting, but if it's true, Fiat's logic behind bringing Alfa back -- that you have to laugh. The idea to get into the U.S. market is to either buy an old Big Three plant and retool, or to expand one of the company's Case New Holland factories. Sales would start in 2011 or 2012, and Alfa would expect to build about 150,000 vehicles a year for the U.S. and some for export to Europe.

Now, building for Europe I can see, since the U.S. is now a low-cost country. But everything else sounds like the Italian version of Punked!, in which some desperate state tries to get manufacturing jobs and gets stuck with Alfa instead.

Start from the premise. Buying an old factory and retooling might make financial sense, but the former employees of that plant will inevitably ask for jobs at the newly reopened plant, making a union work force more likely than not. That's not how any transplant has succeeded in the U.S., with the exception of Toyota at NUMMI. The rule is go greenfield - build your own factory and your own workforce far from existing plants and the UAW. It's sad, but true.

Second goof: in case you haven't read, Fiat, the U.S. car market is shrinking, not growing. Where are those 150,000 sales going to come from?

Third false premise: reliability. Even the lowliest Korean car has a higher quality perception and gets more red circles in Consumer Reports than the best Italian car. Given Alfa's past reputation, isn't it likely that not only will the cars have quality issues, but that shoppers will think they have more issues -- and report back to J.D. Power thusly?

Fourth, let's go back to sales. Fiat CEO Sergio Marchionne wants to build 150,000 Alfas and sell most of them in the U.S. Where will those buyers come from when Saab can't break 40,000 units a year?

What kind of folly makes second-tier automakers from Europe, China, and even Japan think that selling cars in the U.S. is a good idea? Is it Piechian vanity, or just a raw number sitting out there that has to be fulfilled for an up and coming capitalist to take the next step to becoming Prime Minister?

The thirst for Italian cars here may be roughly equal to the thirst for Italian-made coffee makers. I want one of those Francis Francis espresso machines desperately because they're stylish, technically fascinating and come in hot colors. And even though I'd pay $1000 for it, I don't think car shoppers are ready to pay $200,000 -- the equivalent markup -- for a 35-mpg hatchback with an iffy reliability history.

Call it a reverse DeLorean. It's not quite the swindle that China's MG suckered in the state of Oklahoma with, but it's bound for failure. Any elected state official that puts up tax dollars to play Alfa's game of doom should be deposed and forced to drive a Milano with a broken connecting rod as punishment.

Buyer beware.