The vote, conducted over three days, was 712-626 against joining the union, the UAW said in a statement on its website.
Joining the union would have led to the creation of a labor-management works council that would have been a first in the United States.
"While we certainly would have liked a victory for workers here, we deeply respect the Volkswagen Global Group Works Council, Volkswagen management and IG Metall for doing their best to create a free and open atmosphere for workers to exercise their basic human right to form a union," UAW President Bob King said.
UAW Region 8 Director Gary Casteel, who directs the union's organizing efforts in southern states, applauded Volkswagen's "commitment to global human rights, to worker rights and trying to provide an atmosphere of freedom to make a decision."
"Unfortunately, politically motivated third parties threatened the economic future of this facility and the opportunity for workers to create a successful operating model that that would grow jobs in Tennessee."
UAW Secretary-Treasurer Dennis Williams also blamed forces outside the VW plant for the vote results.
"While we're outraged by politicians and outside special interest groups interfering with the basic legal right of workers to form a union, we're proud that these workers were brave and stood up to the tremendous pressure from outside," he said.
"We hope this will start a larger discussion about workers' right to organize."
The Washington Post reported Friday it has been nearly 30 years since UAW has won a vote to represent workers at a plant owned by a foreign car maker.
U.S. Sen. Bob Corker, a former mayor of Chattanooga and a Republican, had voiced a party-oriented stance that says unions are not good for business.
"There's no question that the UAW organizing there will have an effect on our community's ability to continue to recruit businesses," Corker said before the results were announced.
Republican Gov. Bill Haslam had made similar claims, saying a union would send the wrong message to businesses considering opening facilities in the state.
"Right now, because the Democrats are not very effective competitors in most of the state legislative races, most legislators' concern comes from the right, not from the middle or the left," Vanderbilt University political science Professor John Geer said.
"They don't want to give a potential primary opponent an issue, so they're going to play pretty hardball to keep that from happening."
Republican state Sen. Bo Watson said the state Senate, controlled by Republicans, would not look favorably on Volkswagen when it came time to approve tax incentives that are frequently used to lure manufacturers to a state or offset expansion costs, provided the expansion involves new jobs.
Contrary to most union incursions, however, Volkswagen backed the UAW, as it is promoting a management style that includes a works council with union representation that helps make decisions on operations and the work environment.
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