VW EXPECTS HIGHER GERMAN MARKET SHARE IN 1987
Volkswagen AG <VOWG.F>
expects to increase its market share in West Germany in the
full year 1987 after registering gains in the first two months
of the year, managing board chairman Carl Hahn said.
    He told Reuters in an interview that incoming orders in
West Germany, VW's largest single market, had been very good in
early 1987. Its share of the domestic car market rose to 29 pct
in January and February from 26 pct in the year-ago period.
    Hahn declined to forecast first quarter 1987 results, or
answer questions about the VW currency scandal.
    Hahn said he did not want to elaborate on statements VW had
already issued on the affair and noted the case was now in the
hands of state prosecutors.
    VW, like other car manufacturers, had encountered difficult
market conditions in the United States in early 1987, Hahn
said, without giving details.
    He declined to predict U.S. Sales for 1987 as a whole,
saying it was particularly difficult this year to forecast
sales trends in North America, VW's second largest regional
market after Western Europe.
    Hahn declined to comment directly on reports that 1986
losses at Spanish subsidiary Sociedad Espanola de Automoviles
de Turismo (SEAT) totalled up to 27 billion pesetas or that
these losses were twice as high as expected.
    But he said SEAT was developing according to plan and added
the introduction of international accounting standards and
changes to VW's own had led to some corrections to SEAT's
figures.
    VW hoped SEAT would reach break-even point in the course of
this year. In 1986 SEAT's volume sales had been better than
expected, Hahn said.
    In January and February, 1987, SEAT's turnover in Europe
rose 40 pct compared with the same months of 1986, Hahn said.
Its European market share rose to 1.9 pct in January and
February from 1.6 pct a year earlier.
    Hahn said VW hoped to sign a contract with Ford Motor Co
<F.N> in the summer on the planned joint venture between the
two companies' loss-making operations in Argentina and Brazil.
    A provisional joint management team was already looking at
ways of synchronising the two operations, he said. VW's
operations in Mexico had made again made a profit in 1986, he
added.
    Hahn, speaking to Reuters in an interview to mark
production of VW's 50 millionth car, said VW had no plans to
make acquisitions outside the automotive sector.
    It also did not expect to raise capital again in the
foreseeable future after increasing capital by 25 pct in 1986
in the biggest rights issue in West German history, Hahn said.
    In a separate interview Karl-Heinz Briam, the management
board member responsible for labour relations, said VW did not
currently plan to increase its workforce further this year.
    All of VW's domestic plants and most of its foreign
production facilities were currently operating at full
capacity, Briam said. The exceptions were VW's Nigerian
operations and its Westmoreland plant in Pennsylvania.
    Hahn said VW had recently taken steps to increase the
flexibility and improve the structure of the Westmoreland
plant. However, VW was not planning to increase production
there at the moment.
    "Most of the VW vehicles (sold in the U.S.) will, as before,
be built in Germany," Hahn said.
    Hahn said there was room for further growth in West
Germany, and predicted that 1987 would be a good year generally
for the industry domestically.
    Wolfgang Lincke, head of car development at VW, said the
increasing environmental awareness of West German consumers
would allow VW to sell more "higher value" cars in future
containing equipment such as catalytic converters, which cut
exhaust emissions.
    Lincke declined to be drawn on when VW may introduce a
successor to its current Golf model, which in 1983 replaced the
original dating from 1974.
    VW would in any case retain the Golf name. Of the 50 mln VW
cars built since VW started commercial production after World
War II, nearly nine mln have been Golfs, Lincke said.
    VW, which traditionally releases its annual results in
April or May, said last week 1986 profit and dividend would
both be unchanged despite the need to make provision to cover
the possible loss of 480 mln marks from allegedly fraudulent
hedging operations.
    VW has also said the currency scandal would not affect the
company's investment spending.
 REUTER
