VW Says Goodbye to Beetle at Mexico Plant Making Room for SUV

(Bloomberg) — Volkswagen (DE:) AG’s “Love Bug” has been squashed by the SUV boom.

The German automaker marked the end of production of the iconic Beetle at its plant in Puebla, Mexico, on Wednesday and wasted no time talking about what will take its place: a compact sport utility vehicle likely to be called Tarek. It’ll be a beefed-up version of a model sold in China named Tharu.

“We’ll adapt the Chinese model for this market,” Steffen Reiche, chief executive officer of VW’s Mexico business, said during an event at the Puebla plant. “Our version will be the stronger one, the rougher one compared to the Chinese one.”

Demand for the Beetle and other hatchbacks has been crushed by years of low gasoline prices and the American consumer’s appetite shifting toward SUVs and pickups. Trucks have been capturing record share of the U.S. market, prompting automakers including Fiat Chrysler Automobiles NV and Ford Motor (NYSE:) Co. to drop many of the passenger car models from their lineups.

Production of VW’s new compact SUV will begin at Puebla in 2020, with the model reaching U.S. dealerships in 2021.

VW announced the plans about a month after Mexico became the first country to ratify the overhauled North American free-trade deal known as the U.S. Mexico Canada Agreement, or USMCA. The accord requires that 75% of vehicle content be sourced from North America to cross borders tariff-free.

The rules represent a “big challenge” for VW, whose regional content is now at 64%, Reiche said.

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VW’s Puebla plant also builds the Jetta sedan and Tiguan SUV. Reiche said the very last edition of the Beetle will be sold online through Amazon (NASDAQ:).

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