Volkswagen is moving its North American headquarters from Michigan to Virginia next year to be closer to its customer base, the German automaker said Thursday.
Volkswagen of America's move from Auburn Hills, Mich., to Herndon, Va., will begin in April 2008 and be completed in the course of next year, the company said.
It said that 600 of the current 1,400 staff will remain at Auburn Hills in call center and technical services positions, while another 400 employees will be transferred to Virginia. The remaining posts will be cut, Volkswagen AG said.
"The company has already taken steps to reduce its work force through natural fluctuation and voluntary separations," the company said in a statement.
The company said that the decision to move made sense given that it has most of its customers on the East and West Coast.
"This move is part of our company's new corporate strategy of connecting even more closely with our customers, and encouraging fresh ideas and bold thinking," Volkswagen of America President and CEO Stefan Jacoby said in a statement.
Gov. Timothy M. Kaine authorized incentives worth $6 million to bring Volkswagen to northern Virginia. He said Virginia's skilled workers and proximity to Dulles International Airport were significant factors in luring the company away from Michigan.
The company said the move involves affiliated operations such as Audi of America, Audi Financial Services and Volkswagen Credit.
In Lansing, Michigan Gov. Jennifer Granholm met with Jacoby on Wednesday evening after a report in The Detroit News that VW was considering the move.
"The governor is always making the case for Michigan, and she will continue making the case for Michigan," Granholm spokeswoman Liz Boyd said earlier in the day.
"The move underlines our determination to play a new and stronger role in the U.S. market," said Stefan Jacoby, the incoming president and CEO of Volkswagen of America. "This is a logical step, as the majority of our customers are located on the East and West Coast of the United States."
Volkswagen CEO Martin Winterkorn said that "the U.S. market has top priority for Volkswagen."
Shares of Wolfsburg, Germany-based Volkswagen were barely changed, edging down less than 0.1 percent to 150.22 Euros ($204.52) in Frankfurt trading.
Volkswagen AG is the world's fourth largest producer of passenger cars and is Europe's largest automaker.