With skyrocketing demand that will propel Volkswagen of America Inc. U.S./Canada sales to more than 470,000 units this year, VWA Chairman Gerd Klaus predicts the importer will near its all-time annual record of 569,696 units in 1970 by the end of 2002.

That's when Volkswagen AG Chairman Ferdinand Piech is scheduled to retire — and one of his goals was to reestablish the brand as a high-volume seller in North America before he left office.

Mr. Klaus says VW deliveries are up 17% this year, and the importer is moving toward sales of 350,000 vehicles in the U.S. and 42,000 in Canada for 2000. He says Passat is pacing at 85,000-90,000 units and Beetle sales are up nearly 3% from 1999. Jetta also is bound for a record year. “We are pumping on all cylinders,” Mr. Klaus says.

At the same time, Audi deliveries are 37% ahead of year-ago's pace and appear headed beyond 80,000 units in 2000 (80,000 in the U.S., 5,000 in Canada), an all-time record. Part of this success is due to the TT roadster. Audi currently is selling close to 1,000 TTs per month in the U.S. “It's a real home run for us,” Mr. Klaus says. “We can't get enough of it.” He adds that Audi is targeting total worldwide sales of more than 700,000 cars this year.

Mr. Klaus admits that production is running near full capacity at all Audi plants. That's why VW is conducting a feasibility study for establishing a new plant. VW has not decided where the plant would be built. “We don't want to do another Westmoreland,” Mr. Klaus says. That was the site of the Pennsylvania plant that built the VW Rabbit and failed to meet quality standards.

VW also is coping with capacity shortage issues. The only VW plant that is not running all out is in Brazil, which now is supplying Golfs to the U.S.

Mr. Klaus says that VW is watching the market “like a hawk.” He admits that Audi and VW will not sustain growth levels of 30%-40% next year. “You can't have growth on a long-term level at that rate,” Mr. Klaus says. However, he sees the fundamentals of the U.S. economy remaining strong. He also expects another year of brutal incentives, as competition intensifies in a tighter, tougher market.

Still, VWA expects combined VW-Audi sales for the U.S. and Canada to top 550,000 units in 2002, not far off that all-time record.