Volkswagen will decide whether to build Audi models at its new US factory before the end of this year, according to brand sales chief Peter Schwarzenbauer.

He said that VW would gauge US market recovery before deciding to build Audis at the plant under construction in Chattanooga, Tennessee. VW has projected US sales of 11.5m vehicles this year, "slightly more optimistic" than a few months ago, North America boss Stefan Jacoby said.

Audi still lags rivals BMW and Mercedes-Benz in the top market for luxury vehicles where some drivers still associate the brand with 'unintended acceleration' accidents in the 1980s and 1990s. Audi's 82,716 registrations last year were dwarfed by BMW's 241,727 and Mercedes' 190,604.

VW aims to sell 200,000 Audis a year in the US by 2018, or 20% of the 1m cars it has planned annually.

VW sold 214,000 cars in the US last year, excluding Audi, and aims to more than double that to 450,000 cars by 2012 to 2013, Jacoby said.

Chattanooga initially will build a 'designed for the US' VW sedan.