The American market has long been a problem child for Volkswagen.

The German automaker was chronically in deficit here, and the affair surrounding the manipulation of diesel cars also left its mark here.

In America, VW has descended from a “cultural icon” to “irrelevantness”, and the diesel affair has made the group “unpopular”, said America boss Scott Keogh on Monday, summarizing the development of the past decades.

The aim now is to make the brand “liked and loved again”.

Christian Muessgens

Business correspondent in Hamburg.

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Roland Lindner

Business correspondent in New York.

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VW had already made a profit in North America last year, although the group remained a niche supplier with a market share of around 4 percent.

An investment offensive should now bring the leap forward.

On Monday, the company announced plans to spend a total of $7.1 billion in the United States, Canada and Mexico over the next five years.

The sum is part of the group-wide investment plan of 159 billion euros announced in December.

An important building block in these plans is electromobility: VW wants to set up battery production in the USA and thus follow the example of its competitor Mercedes-Benz, which opened a battery plant in Alabama a week ago.

Volkswagen's head of America, Scott Keogh, did not provide any information on the location on Monday.

VW also announced the goal of bringing more than 25 electric cars to the American market by 2030.

By then, electric vehicles are expected to account for 55 percent of annual sales in the market, which would put VW slightly above US President Joe Biden's target of a 50 percent share of zero-emission vehicles by 2030.

VW is now selling its ID4 electric car in America, a sporty off-road vehicle (SUV) that has so far been imported from Germany, but is also to be manufactured at the US plant in Chattanooga from this fall.

The Bulli successor ID Buzz is to come in 2024, and further SUVs are planned for 2026.

There is also speculation

according to which VW wants to develop an electric pick-up van and thus open up a product segment that is particularly important in the USA.

Keogh hasn't given details on this, but said he thinks it's a "good idea".

More than 400,000 this year

VW CEO Herbert Diess announced an offensive last week to strengthen its position in America.

It is about "balancing the global activity", i.e. becoming less dependent on the group's dominant sales markets in Europe and China, he said.

"We have a weakness in the USA, we are concentrating on that." Most recently, North America accounted for a good 9 percent of global sales in the VW Group, South America for almost 6 percent.

The Asia-Pacific region, with China as the largest market, accounted for a good 41 percent, while Europe and the rest of the world accounted for almost 44 percent.

This imbalance in the global presence has occupied the group for a long time, but the Ukraine war has given it new explosiveness.

After Russia's attack on the neighboring country, the European car factories are missing components that previously came from plants in western Ukraine, especially cable harnesses.

Together with a possible setback for the economy, this should have a severe impact on deliveries in the region.

The risks are also growing in China, not least because the People's Republic is not distancing itself from Putin's aggression.

Depending on how the conflict unfolds, restricted business in China no longer seems entirely out of the question for VW.

VW had early successes in America and struck a chord with models like the Beetle and the Bulli during the years of the economic boom, but was unable to continue later due to an insufficient range of vehicles and fierce competition.

In the meantime, there was a spirit of optimism when the plant in Chattanooga opened in 2011 to build cars specially tailored to the US market.

But after an initial boost, business slowed down again, and then the diesel scandal plunged the company into the deepest crisis in its history.

This affair has now receded into the background, last year VW was able to increase its sales figures in America by 15 percent to 375,000 vehicles and was profitable.

In the current year, America boss Keogh wants to create more than 400,000, and then "quite quickly" more than 500,000.

The current market share of 4 percent should more than double in the medium term, VW had recently announced as a goal.