Volkswagen car sales to drop in H2 as government incentives end

Volkswagen AG, Europe’s largest carmaker, said automobile sales won’t reach pre-crisis levels in 2010 after delivery growth last month slowed to 2.9 percent.

“Now that incentive programs have come to an end, the global automotive market is expected to decline in the second half,” sales chief Christian Klinger said in an e-mailed statement today. VW in the coming months “will perform better than the competition. However, this will be a challenge, given an operating environment that is again becoming difficult.”

VW sold 572,200 vehicles in July compared with 556,200 a year earlier, the Wolfsburg, Germany-based carmaker said in the statement. Seven-month sales rose 14 percent to 4.16 million vehicles.

Volkswagen is targeting a second consecutive year of record deliveries as it adds about 70 models, including upgrades, in 2010. Second-quarter net income of 1.25 billion euros ($1.6 billion) was the carmaker’s biggest profit in two years, fuelled by demand in China. VW plans to double production capacity in China to 3 million vehicles in four years.

Sales in China, Volkswagen’s largest market, expanded 42 percent in the first seven months to 1.1 million vehicles while U.S. deliveries increased 27 percent to 207,100. Sales in Western Europe, excluding Germany, rose 18 percent to 1.2 million cars. The carmaker’s German home market slumped 19 percent to 606,200.