Volkswagen AG, Europe's largest carmaker, won't expand car production in China beyond the current 900,000-unit capacity as sales growth slows and the country's market is "so difficult"' to predict, said chief executive Bernd Pischetsrieder in an anal-ysts's conference call.
Volkswagen also reiterated its profit forecast for the full year, with chief financial officer Hans-Dieter Poetsch saying the Wolfsburg, Germany-based carmaker would "stick to the commitments" given at half-year results last month.
The carmaker last month lowered its operating profit forecast for this year by a quarter to 1.9 billion euros (US$2.34 billion) excluding one-time items because of rebates on cars, higher oil prices and spending on reorganization.
Volkswagen expects its full-year profits in China, its major foreign market, to fall owing to currency factors, Poetsch said.
"But we are confident of impressive figures in 2004 and 2005," he added.
Volkswagen said last year that it will invest 6 billion euros, or 60 billion yuan, to double manufacturing capacity in China to 1.6 million vehicles a year and in June said it would open three more factories under the pro-gram. Since then, the carmaker has lowered prices as demand has slowed in response to government's efforts to limit lending.
"We have no intention of freezing capacity at 900,000 units but we have no intention of having excess capacity either," Pischetsrieder said.
Volkswagen will decide next year whether to increase production beyond the current level, he said.
The carmaker expects to sell between 700,000 and 800,000 units in China this year, up from 697,000 last year.
This is lower than a prediction in June made by Bernd Leissner, chairman of Volkswagen's China operation, who said at that time that Volkswagen's sales should rise in line with an 18 percent to 20 percent rise in the market. That would set sales at 822,000 to 836,000 units.
Volkswagen's profit from its China ventures will fall this year from last year's 561 million euros.
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