This is the first step in a major expansion plan for Audi. They want to increase sales from last year's 900,000 units to 1.5 million by 2015. Apparently once Audi sales exceed 1.2 million a year they will consider building cars in the United States. Audi also wants to increase their margins on car sales to compete with BMW. That means that the A1, or whatever they ultimately choose to name it, will likely be a higher spec model, sold at higher prices. What's unclear at this point is whether the new car will share a platform with VW's new Smart competitor.
Thanks to Christian for the tip.
[Source: Reuters via GermanCarBlog]