GENEVA — A U.S. assembly plant is just the first step in Volkswagen's grand plan to boost sales in the United States. Group CEO Martin Winterkorn says VW also is contemplating small cars and perhaps a pickup, and is planning to replace the Passat and Jetta with cheaper sedans targeted at U.S. customers.

In an interview at the Geneva auto show, Winterkorn outlined a host of ideas being considered as part of an ambitious strategy to increase VW and Audi total U.S. sales to 1 million units by 2018 up from 328,068 last year.

Growth in the United States is crucial to VW's long-term ambition to match sales of Toyota Motor Corp.

"I am sure if we want to grow, we have to go to the United States," Winterkorn said.

VW is reviewing economic packages from governors of several states for a U.S. factory. Sources say Volkswagen is still considering North Carolina, South Carolina and Georgia.

Winterkorn said the plant site will be chosen by early summer. VW decided not to expand its factory in Puebla, Mexico, which is nearing its capacity of 500,000 units annually.

The new plant likely would build a Passat replacement designed for the United States. The car would get a new name and cost about $20,000. The base model for the current Passat is priced at $24,680, including shipping.

Eventually, a smaller car and even Audi vehicles could be built at the plant, Winterkorn said.

The successor to the U.S.-built Passat probably would not be exported to other markets.

Cars must suit U.S. buyers

"We need to produce cars that fit the American customer," Winterkorn said. "The Jetta and Passat are too expensive. We need models that hit the sweet spot."

VW also is considering a car the size of its European Polo for the United States. Winterkorn said U.S. dealers tell him they are eager to get the Polo, which is about the size of a Honda Fit. He said East Coast dealers want a notchback, and dealers on the West Coast want a hatchback.

Another possibility is to bring over a new family of small vehicles based on the space up! concepts, which VW rolled out at the Frankfurt, Tokyo and Detroit auto shows. Winterkorn said the vehicles have been approved for sale in Europe but not in the United States.

"We are discussing the new small family and the Polo for America and whether it is feasible from a cost and price point," he said. "To make the Polo in Europe and bring it to America would not work."

Winterkorn said VW is also developing a replacement for the Jetta that would cost about $15,000 and would be more suited to U.S. tastes than the existing car. Currently, the least-expensive Jetta is priced at $17,030, including shipping.

The Jetta successor likely would be produced in Puebla, where today's Jetta is made.

Phaeton may return

A successor to the Phaeton luxury car also could come to the United States with an eight-cylinder engine and possibly a diesel. The long-wheelbase Phaeton sold in the United States was powered by a V-12.

The new one might not be as large as the first Phaeton, which was withdrawn from the United States in 2005 after poor sales. But it would be bigger than the Passat-based, coupelike CC luxury sedan that goes on sale this year. The CC is about a half-inch longer than the standard Passat sedan.

"We are looking at the figures to see if this is possible," said Winterkorn. "I believe we should do a Phaeton successor. The Volkswagen brand needs a car like the Phaeton."

Winterkorn said VW wants to increase group sales — encompassing the VW, Audi, Skoda, Seat and Bentley brands — to 8 million units by 2011, up from 6,192,000 last year.

The main growth would come from adding SUVs such as the Tiguan, which goes on sale in the United States this year. Also in the pipeline are the Audi Q5 and Q3 — two SUVs smaller than the Audi Q7. The Q5 goes on sale next year and the Q3 in 2010.

Better Touareg, new pickup?

Winterkorn also wants to do better with the next-generation Touareg SUV. The current version fell short of sales expectations because of quality problems at launch, he said.

"We sell more Audi Q7s in the United States than the Touareg," Winterkorn said.

In addition, VW plans to launch a body-on-frame pickup for sale in South America and Europe at the end of 2009. Winterkorn said the pickup would be similar in size to the compact Toyota Hi-Lux, and he doesn't rule out selling it in the United States.

VW's Routan minivan, which will be built by Chrysler for VW, goes on sale this fall. The Routan will be a Chrysler-based vehicle for only one generation, said Winterkorn. He said the successor "will be from VW."