WASHINGTON (AP) -- Volkswagen remains on track to make a decision in July on where it will build an assembly plant in the United States, the company's North American chief said Thursday.

Alabama, Tennessee and Michigan have been designated as finalists for a future plant. But Stefan Jacoby said the eventual location is not as important as the decision to build new vehicles here.

"The most essential change which is coming up for us is that we produce locally here in the United States," Jacoby told members of the Greater Washington Board of Trade. "That brings us in a position where we can better understand the market, that we can react faster to market needs and market changes than we have done before."

Jacoby, Volkswagen Group of America's president and CEO, said it was "an interesting question of where we produce and I expect an answer in July." He declined to elaborate on the discussions.

The plant is part of the Wolfsburg, Germany-based company's strategy to increase its presence in the U.S., where it holds only 2percent of the market. Earlier this year, Jacoby said the automaker hopes to more than triple its U.S. sales to 1 million by 2018.

The automaker has said the surging euro has pushed along plans for a new production facility. The 15-nation currency has been close to record highs in recent weeks against the U.S. dollar, making goods exported from Germany more expensive in the United States.

Volkswagen, which closed its last U.S. production facility near Pittsburgh in 1988, has said actual production at the facility is not expected to start until at least 2010.

Volkswagen recently moved its North American headquarters from suburban Detroit to Herndon, Va., near Washington, to bring it closer to its East Coast customer base. Jacoby reiterated that the decision was part of an overall strategy to "change the mind-set" of its U.S. operations.

"It was not a decision against Michigan. Michigan will remain the capital of the American automotive industry," he said.