Europe's leading car maker, Volkswagen, warned yesterday that it would be unable to match last year's profits without an upturn in demand in Europe and the US and an improvement in exchange rates in its main markets.
Last year the group clocked up pre-tax profits of almost 4bn euros (£2.8bn) and sold nearly 5m cars to produce its second best annual performance.
Speaking at the annual press conference in VW's new Dresden plant, management board chairman Bernd Pischetsrieder said the group was hoping that sales this year would top the 5m mark. But he warned: "Given present exchange rates - particularly for the US dollar, sterling and the Chinese renminbi - and in the event that the market situation in western Europe and the US does not improve, we will not be able to match the 2002 operating profit of €4.76bn this year."
Last year sales revenues fell by just under 2 per cent to 87bn euros with Europe almost flat, North America down 3 per cent, South America and South Africa nearly a quarter lower and only the Asia Pacific region recording a rise, of 8.7 per cent.
Mr Pischetsrieder noted that political and economic uncertainties meant results for the first quarter of the current year would be "significantly lower" than in the same period last year.
Yesterday's news initially knocked 10 per cent off the VW share price as the market reacted to Mr Pischetsrieder's assessment of the outlook, which proved gloomier than those from some of VW's European rivals - such as Peugeot Citroën and Renault. The shares ended the day nearly 9 per cent lower at 29.69 euros.
The VW boss said the group expected to bounce back next year as it benefited from further cost cutting and a string of model launches including the next generation Golf and the new, £110,000 Bentley Continental GT.
In the first two months of the year VW has sold some 732,000 cars, up 4.5 per cent on the same period last year. But Mr Pischetsrieder said the improvement was due solely to rising sales in China. Elsewhere in the world, sales were down by 32,000.
