VW's key U.S. model delayed by incentive tug-of-war - sources
* Crossover site decision could take until end-June
* Level-pegging between Chattanooga and Mexico
* Audi's new Mexico SUV plant also a candidate
By Andreas Cremer
BERLIN, June 2 (Reuters) - A tug-of-war between Mexico and Tennessee over incentives is delaying Volkswagen's decision on where to build a make-or-break vehicle in North America, sources said, delaying the German group's efforts to fix its ailing U.S. business.
Last week, the state of Tennessee reopened talks with VW on tax breaks and infrastructure to lure the firm to build a midsize crossover at its Chattanooga plant, after a pitch by Mexican authorities, sources told Reuters on Monday.
Level-pegging between Chattanooga and Mexico means it could take at least until the end of June for VW to pick a production venue, either its $1 billion Chattanooga plant or a site in Mexico, two sources familiar with the matter said.
VW had initially hoped to take the decision by now, sources said. It announced the crossover - combining features of a car and a sport utility vehicle - at the Detroit auto show in January as part of a $7 billion investment package for North America.
"VW is taking way too long again to tackle another pressing U.S. problem," said Arndt Ellinghorst, London-based analyst at ISI Group. "The crossover will be a gainful addition to their portfolio, VW has got no time to waste." Continuación...