Audi AG will make a decision on a U.S. plant by mid-2009, said Peter Schwarzenbauer, board member in charge of marketing and sales.

The German automaker is weighing whether to build a stand alone assembly plant or to share the $1 billion plant that Volkswagen AG has under construction in Chattanooga, Tenn., that is slated to begin production in early 2011.

One factor in the decision is the timing and lifecycle of the products that will be built in the U.S., said Johan de Nysschen, Audi of America Inc. president.

Audi has some candidates in mind but Schwarzenbauer would not elaborate.

Volkswagen has said it will build a new mid-size sedan aimed at American consumers in the new facility. The VW plant initially will have the capacity to build 150,000 vehicles annually, with the potential to expand to 200,000. VW also is considering building an engine plant in the U.S.

Audi experienced a 6.3 percent sales drop in the U.S. in 2008, but gained market share to a record 7.1 percent of the luxury segment, de Nysschen said. And the automaker reported its 13th consecutive record year of sales globally and met its goal of exceeding the 1 million vehicle sales mark.

Success, despite falling markets worldwide, led Audi to decide before Christmas that it will not change any of its product investment plans, Schwarzenbauer said. Audi has 26 models worldwide now and has renewed its commitment to its plan to increase that to 40 by 2015 with target volumes of 1.5 million vehicles worldwide including 150,000 to 200,000 in the U.S.

To that end, Schwarzenbauer said Audi is taking a new look at whether a subcompact car such as the A1 would sell in the U.S. The tiny car was designed for Europe a few years ago when there was zero appetite for a car that small here. But that has changed, and the Audi board member said North America will be considered when the next generation of the car is developed.

Schwarzenbauer said he thinks consumers would prefer the larger vehicles they have become accustomed to, but with smaller, more efficient and turbocharged engines.

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Audi U.S. Plant Decision Coming By Mid-2009

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