Volkswagen considers Up! model for U.S. market

By Poornima Gupta

NEW YORK (Reuters) - Volkswagen AG could launch the Up! mini-car in the United States, the German automaker's U.S. Chief Executive Stefan Jacoby said on Wednesday.

"Up! could be in the future of the market here," Jacoby said at the New York Auto Show. "In urban areas like New York, a car like Up! has a good chance."

Volkswagen expects to introduce the car as a 2012 model, but is still deciding where to build it and in which countries to sell it.

The Up! was first seen as a two-door hatchback concept vehicle at the 2007 Frankfurt Auto Show and is expected to have a fuel-efficiency of more than 50 miles per gallon.

Volkswagen continues to invest in technology and alternative-fuel vehicles to improve fuel-efficiency despite the steep plunge in global auto demand, Jacoby said.

"We are looking at second-generation biofuels, electric cars, hydrogen fuel cell vehicles and nanotechnology," Jacoby said. "But just as we have to be realistic about economic conditions, we have to be realistic about the prospects for alternative fuels."

The conventional combustion engine will continue to dominate the auto industry in the near future, Jacoby said.

Jacoby said he didn't see any recovery in the U.S. market until late 2009.