DETROIT — Despite years of sliding U.S. sales for Volkswagen, Adrian Hallmark, Volkswagen of America executive vice president, said he's optimistic the brand can hit annual U.S. sales of a half-million vehicles within five years and he's pushing hard for the German automaker to build a new assembly plant in North America.

If successful, it will mark a dramatic turnaround for Volkswagen. Europe's largest automaker has been struggling to find traction in the United States, leading some to question whether it can compete in this country.

The German company announced Sept. 5 that it was pulling its North America headquarters out of Auburn Hills, Mich., and moving to Herndon, Va. About 900 of Volkswagen of America's 2,000 U.S. employees are based in Auburn Hills.

In a recent interview with the Detroit Free Press, Hallmark, a former Bentley and Porsche executive who came to Volkswagen of America two years ago, said Volkswagen is committed to the U.S. market. Volkswagen's North America unit has lost about $4 billion over the past four years.

"If you'd lost a billion or two over a couple of years, you'd think twice," Hallmark said. "But if you want to be a global volume player, how can you not be in the biggest global market?"

Volkswagen is retaining some presence in Auburn Hills and is assessing its North American operations, including the possibility of building a new assembly plant.

"If there ever were a factory investment, then you'd definitely want to look at where that is and put some administrative support there," Hallmark said. "If we invest and expand, that's good news, but how it will look — not yet determined."

Volkswagen's assessment of its role in the United States comes at a crucial time for the company. Quirky vehicles like the Beetle and Microbus struck a chord with U.S. consumers in the 1960s.

The fuel-efficient Rabbit hatchback gave Volkswagen reason to believe mass-market growth was ahead. The German automaker opened an assembly plant in New Stanton, Pa., in 1978.

A decade later, the plant closed. Jumps in U.S. sales have since been short-lived. A redesigned Beetle, Jetta and Passat did well in the late 1990s and early 2000s, but the momentum was not sustained.

Volkswagen failed to follow up quickly enough with fresh designs, particularly for its mainstay Jetta, Hallmark said. Prices also rose, often moving cars like the Jetta out of consideration for some customers, he said. From 2000 to 2006, Volkswagen's U.S. sales dropped 34 percent, to 235,140 vehicles.

Volkswagen has slowed the decline this year, primarily by reviving the Rabbit nameplate for its hatchback, previously called the Golf, and giving it a starting price of less than $15,000.

"We took a view on margin: We don't have one," Hallmark said about the Rabbit. "The dealers took a view on margin: They have a very small one. But we positioned it to sell. We positioned it to be an image leader for the company to get us back to this message of affordability."

The real turnaround will not start until next year, Hallmark said. Volkswagen will introduce a new minivan, which will be built by Chrysler LLC. A new Jetta diesel, a small SUV called the Tiguan, and a new midsize car based on the Passat also are planned. The midsize car, yet to be named, will be priced slightly higher than the Passat.

Volkswagen also is developing its next-generation compact car, a Jetta replacement, expected to arrive in the United States in two to three years, Hallmark said.

This new product offensive is what has Hallmark pushing the German board for a new assembly plant in North America. Volkswagen has a factory in Mexico that makes the Jetta and Beetle, but Hallmark said it likely could not be expanded enough to feed his sales goal of 500,000 vehicles a year in the United States by 2011 or 2012.

"The commitment from the board is that they're serious about this market, and they're at least evaluating" a plant "in detail," Hallmark said. "They don't play around."

Volkswagen has said it is addressing quality concerns. By 2009, Volkswagen has set a goal to cut in half the 171 problems per 100 vehicles it registered in the J.D. Power and Associates 2006 Initial Quality Study — aiming to score among the best ever.

Volkswagen also is set on getting it right with the next set of products, Hallmark said. Volkswagen vehicles should be exciting but still within reach of U.S. consumers, he said.

The goal is to clearly stamp new products with German engineering — performance, style and an obsessive attention to detail.

(Distributed by McClatchy-Tribune Information Services.)