Most days, test driving the New Beetle at VW Santa Monica is a waiting game. More than a year after the bug reduction, because shoppers still pack up to five to get behind the wheel, like queuing for a carnival ride. “We can’t go with the flow,” sighs VW dealer Jeff La Plant, who has nearly doubled his sales force. “The New Beetle is like a magnet that draws people to us.”

In fact, Beetlemania has revived Volkswagen in the United States. The whimsical bubble-phone continues to pick up speed, and the rest of VW’s lineup follows suit. The German automaker’s overall sales are up 44.6% in the US so far this year. Its market share, which sank below 3% in 2000, has risen to 7%. And VW is on track to sell nearly 300,000 cars in the US in 2010, a level Volkswagen hasn’t enjoyed since the Nixon administration. “VW is absolutely back on the map,” says La Plant. “We’re totally in fashion again.”

But don’t look for the next comeback of the psychedelic VW Microbus. Instead, think of a pickup truck. On November 26, VW chairman Ferdinand Piech took his North American executives by surprise by making public his hopes of offering a full-size pickup truck with the comfort of a car. Company insiders believe he has been driving his family around Germany in a new Toyota Tundra, a vehicle that moves trucks in the direction he wants to take VW. Piech says the truck can be built on the same chassis as the 2011 model sport utility vehicle that VW is developing with Porsche.

But Piech’s pickup plan is causing transatlantic tension. North American VW executives want Germany to stop: They fear it could undermine VW’s quirky, offbeat image, built around the Beetle, Passat sedan and compact Jetta. They argue that a van would be difficult to credibly promote in VW’s humorous “Drivers Wanted” ad campaign. “We have to be consistent with our image,” says Jens Neumann, VW’s top executive in North America. “We still have a lot of thinking and discussion to do.”

Piech, however, is hungry for the $10,000 per vehicle profit some trucks generate for Detroit. And with price wars cutting into VW’s margins in Europe, he is increasingly keeping an eye on its thriving North American operations, where dealers can command sticker prices and more for their popular models. VW’s Audi luxury lineup is also enjoying an American resurgence, with popular models like the TT coupe driving sales 38.4% this year. “As we move up, the profit margins are getting better and better,” says Neumann.

Still, the flow of dollars from the United States has been small so far. Of VW’s $3.4 billion in pretax profit last year, North America contributed just $85 million, or 2.5%. Analysts project that North America could account for 5% to 10% of VW’s global earnings this year. “It’s nice to have,” says Morgan Stanley analyst Greg Melich Dean Witter. “But it’s not much.”

Still, the biggest challenge for VW is Piech’s desire to pit the brand directly against Mercedes-Benz. In Europe, where taxis are Mercedes and VW is luxury, that may be reasonable, analysts say. Yet in the US, Mercedes floats at the top of the automotive food chain, with VW several leagues below. Still, VW’s sport-ute is expected to be priced close to Mercedes’ M-class in the $35,000 to $40,000 range. And in 2011, VW will introduce a $40,000 luxury car. “Going after Mercedes could come at the expense of Audi,” warns auto analyst Lincoln Merrihew of Standard & Poor’s DRI.

For now, VW dealer La Plant, which has seen its sales double in the past three years, is primarily concerned with having enough inventory. “More products means more mass,” he gushes. The Beetle, Passat and Jetta put VW back on the road to prosperity in the US Now the question is: can a truck attract even more buyers?