CHATTANOOGA (AP) — Spanish auto parts maker Gestamp is beefing up its operations in Chattanooga with a $180 million investment that the company says will triple its capacity in the city and create 550 new jobs, officials announced Tuesday.

The investment includes an expansion of Gestamp's existing Chattanooga plant and construction of a new plant on the Volkswagen campus that will produce sheet metal pieces for the outside of a new mid-size SUV currently in development.

Locating the new stamping plant next to the automaker will save on transportation costs and help the two companies work together to quickly solve problems, Volkswagen Chattanooga President and CEO Christian Koch said at a news conference.

Volkswagen is providing 59 acres for the new Gestamp facility as part of a land swap with Chattanooga and Hamilton County. The new facility is scheduled to begin construction in August and start production in December 2016.

Koch said Volkswagen Chattanooga is currently building the prototype for a redesigned Passat that will launch this fall as well as designing the company's first seven-passenger sport utility vehicle.

Gestamp President and CEO Francisco Riberas thanked Volkswagen for having the confidence in Gestamp to give it the responsibility of helping launch the new SUV.

Riberas said he's convinced that the SUV will be a "success story," along with the new Passat, that will help Volkswagen increase its position in the U.S. market.

Jeffrey Wilson is president and CEO of Gestamp North America and Asia. He said the company will also begin manufacturing chassis for the first time in North America. It will also introduce hot-stamping technology. That process allows the cockpit areas to be both stronger and lighter, increasing fuel efficiency.

Gov. Bill Haslam told reporters the state is offering an incentive package for the investment. He declined to say how much, saying it is still being finalized.