Volkswagen Predicting Losses On North American Car Sales

Soft U.S. economy and unfavorable currency exchange rates blamed for lack of profit in 2007 and 2008.

LOS ANGELES (AP) – Volkswagen AG officials said they may not make money in North America until 2009 due to a softer U.S. economy and unfavorable currency exchange rates between the U.S. and Germany.

To compensate for the exchange rate, Volkswagen hopes to sell more cars in the U.S. that are manufactured in Mexico. It has reduced the base prices of its Mexican-made Jetta and New Beetle models to about $16,500 from about $18,000.

The company likely will lose money in North America this year and in 2008, Volkswagen of America spokesman Keith Price said Thursday at the Los Angeles Auto Show.

VW had predicted a North American profit in 2008 but that has been delayed because two new products won't roll out until later that year, Price said.

VW will offer the Tiguan compact sport utility vehicle in June of 2008, and in the fourth quarter will roll out a new minivan produced by DaimlerChrysler AG's Chrysler Group.

''We really don't get the benefit of the volumes that those new products will bring until very late into the year,'' Price said.

Volkswagen's earnings worldwide have begun to improve, boosting its share price. The stock has risen by nearly three-quarters in the past 12 months.

Last month, VW posted a 77 percent rise in net profit and stronger sales for the first nine months of the year, despite high restructuring costs that weighed on third-quarter results.

Yet the company said it lost $170 million in North America during the third quarter.


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