Volkswagen may miss sales target

VW hopes the Phaeton will drive growth in the second-half of the year

VIENNA, Austria -- Volkswagen, Europe's biggest carmaker, warned it may not sell as many cars as it did last year, as sales decline across Western Europe.

Analysts have predicted sales could fall by as much as five percent this year and German automotive industry association VDA expects new car unit sales to fall to 3.2 million this year in Germany, down from 3.34 million vehicles last year, amid continued economic gloom in VW's home market.

Volkswagen board member Robert Buechelhofer, who is in charge of sales and marketing, said on Friday the company may not sell five million cars achieved last year, but stuck firm to the company's previous profit forecasts.

"We hope [to reach five million vehicles] and are fighting with all our might for it,'' said Buechelhofer.

Western European car sales fell eight percent in May and are down 3.8 percent in the year so far, as volume carmakers struggle to maintain price rises amid tough competition. Volkswagen's leading position is under threat from French rival Peugeot, which is winning market share with its sleek 206 and 306 models.

MORE STORIES • VW investors look for hope  • Ex-BMW boss to lead VW  • VW profit drops by a quarter  • European car sales in reverse

Volkswagen -- which makes the New Beetle, Golf and Passat, and owns luxury marques Audi, Lamborghini, Rolls-Royce and Bentley -- has been hurt by weak demand in its key markets in Europe and the United States because of its aging Golf and Passat models.

The company hopes that new models like the VW Phaeton, Polo and Seat Ibiza will pull in buyers to its showroom.

Buechelhofer said the company still expected to match its 2001 full-year pretax profit of 4.4 billion euros ($4.25 billion) this year. In May, the company said profit in the first-quarter of this year declined by a third to 627 million euros ($566 million). Pretax profit fell 20 percent to 997 million euros as sales dipped 5.4 percent to 21.27 billion euros.

In recent years, exports to the United States and a strong dollar has boosted Volkswagen's profits but its stock has lost ground in recent months as the euro strengthens, which could start to crimp exports.

The company's stock (FVOW), which has fallen about 18 percent this year, slid 3.1 percent to 47.71 euros in mid-afternoon trading on Friday.