H Europe's biggest carmaker Volkswagen
warned on Thursday that the downturn gripping the European auto
market could intensify competition and hit the group's profit in the
"The next months will be anything but easy," VW chief Martin Winterkorn told a meeting of shareholdersin the northern German city of Hanover.
He added that the company's workforce could also feel the impact of the sharp drop in sales across Europe.
VW needed "considerable flexibility in production" as it faced up to grim times that have engulfed Europe's carmakers, he told the meeting.
"In particular, Europe remains the shakiest candidate," Winterkorn said.
New European car sales fell for the 18th consecutive month in March, plunging 10.2 per cent compared with the same month last year as the region continues to suffer from recession and high unemployment.
The stockholders' meeting came just one day after the group said it was maintaining its business outlook for the year despite posting a 26-per-cent slump in first-quarter profit.
The group said its closely watched operating profit in the three months to March dropped to 2.34 billion euros (3.04 billion dollars) compared with 3.17 billion in the same period last year.
The tough business environment across Europe could eventually force more discounts, undercutting VW's earnings, Winterkorn said.
"The competitive pressures remain high and continue to increase," he said.
China's fast-paced car market has been a key source of business growth for European auto groups in recent years and VW is determined to defend its position in the country.
"By 2020, the market will grow to over 20 million. We want to have a minimum market share of 20 per cent," Winterkorn said.
The German carmaker's market share in China - the world's biggest car market - stood at 20.8 per cent in 2012 after selling 2.8 million vehicles.
But to protect its business empire in China, VW will have to sell 4 million vehicles in the country by 2020, Winterkorn said.
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