• by Karl Greenberg , December 8, 2006

Volkswagen's luxury Audi division--which is on track to set sales records this year--recorded its strongest November ever in the U.S., with sales up 16.4 percent, the company reported yesterday.

Audi introduced new versions of the A4 and Q& SUV this year.* In the U.S., year-to-date sales are up 5.4 percent through November, the company said.

The company also announced this week that Rupert Stadler will become new acting chairman of the Audi board. Stadler, who is a current board member with responsibility for finance and organization, fills a position recently vacated by Martin Winterkorn, who on Jan. 1, will become CEO of parent Volkswagen AG. (Winterkorn replaces Bernd Pischetsrieder, who was ousted in November by VW's supervisory board.)

Volkswagen has begun rebuilding U.S. sales with a long-awaited slate of new vehicles and redesigns after letting bread-and-butter vehicles like Passat and Jetta get long in the tooth in favor of higher-end vehicles like the SUV Touareg and the ill-fated Phaeton luxury sedan.

The company reported sales are up 8.6 percent through November, versus the period last year. Still, VW is weighed down by production costs that have forced it to sell cars in the U.S. at a loss. The company lost $1.1 billion in the U.S. last year.

Analysts say VW has a way to go to rebuild the brand to the volume it had even four years ago.

"They have not been strategic in this market," said Todd Turner, president of Car Concepts, Los Angeles. "Phaeton turned out to be one of the biggest failures since the Edsel, and it takes a long time to turn that around, especially when you have lost an entire segment of buyers because the replacement for bread and butter vehicles like Jetta took seven or eight years, when others are producing replacements every four years. An entire segment of buyers went somewhere else. Winning them back will be the challenge, and it will require a lot more marketing dollars."

It's a challenge Industry observers say Wolfgang Bernhard, VW worldwide brand chief, is unlikely to stick around to face. Some say it isn't beyond the realm of possibility that the popular German executive might return to DaimlerChrysler, whose U.S. division Chrysler Group is struggling. Bernhard and DaimlerChrysler CEO Dieter Zetsche enjoy a good relationship.

* This sentence was modified after the story original posted.