VW to focus on Asia, not mergers, to spur sales

Volkswagen AG, seeking to boost car deliveries 60 percent by 2018, plans to meet the goal with internal growth in Asian markets and not acquisitions, said two people familiar with the matter.

Europe's largest carmaker will expand its lineups and current brands in markets including India and China to achieve sales of more than 10 million cars, sport-utility vehicles and vans a year, said the people, who declined to be named because the business assumptions aren't public.

Chief Executive Officer Martin Winterkorn is outlining to investors today how VW wants to overtake Toyota Motor Corp., the world's biggest carmaker, in both deliveries and profitability in nine years. Since he unveiled the targets yesterday, speculation that VW may want to buy Fiat SpA's Alfa Romeo unit has resurfaced in newspapers including Milano Finanza. Instead, the CEO plans to streamline manufacturing across VW's nine brands, allowing it to adjust production faster to changes in demand, the people said.

VW is combining with Porsche SE, the maker of the 911 sports car, and in January bought 19.9 percent of Suzuki Motor Corp., Japan's second-largest minicar maker, for $2.5 billion.

The tie-up with Suzuki will give Wolfsburg, Germany-based VW access to India and Southeast Asia, two "boom regions that VW needs to grab" to reach the delivery target, said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. "They need a footing in those markets to take advantage of Suzuki's minicar expertise."

Emerging Markets

Michael Brendel, a VW spokesman, called the Milano Finanza report "speculation." Fiat CEO Sergio Marchionne said Jan. 11 that the Italian carmaker is reviewing the Alfa Romeo unit and has no plans to sell the 100-year-old brand even after difficulties competing with German carmakers.

Gasoline and diesel-powered vehicles will remain dominant in Europe for the next 20 years, Winterkorn told an investor conference in London today.

Emerging markets may account for 52 percent of Volkswagen's deliveries by 2018, compared with 47 percent last year, Chief Financial Officer Hans Dieter Poetsch said at the same event. Chinese auto market will expand as much as 15 percent this year, he said.