March 13 (Bloomberg) -- Volkswagen AG, Europe's largest carmaker, plans to introduce 20 models over the next three years in an effort to boost deliveries 29 percent to a record 8 million vehicles by 2011.

``The group will significantly expand its model portfolio with this product rollout, and will occupy segments such as sport-utility vehicles, vans and pickups,'' Chief Executive Officer Martin Winterkorn said at a press conference at the company's Wolfsburg, Germany, headquarters. ``The days of the `world car' are dead. We must tailor our model portfolio to the regional customer's needs.''

The model rollout will be accompanied by a 10 percent annual increase in productivity as Volkswagen seeks to boost the carmaking division's return on investment in the ``medium term'' to more than 10 percent from 9.5 percent last year, the CEO said.

Winterkorn reiterated a forecast for record profit and sales in 2008 on labor cost reductions and higher demand for the new Golf, the carmaker's best-selling model, and Audi A4 sedan. The CEO boosted profit last year after reducing the Volkswagen brand's workforce in western Germany by 20 percent and offering a new version of the Skoda division's Fabia and the Audi unit's A5.

`Tacit Recognition'

``It is a tacit recognition that the global market is not homogenous and a universal car will no longer satisfy the demands of an American and Chinese consumer simultaneously,'' said Stephen Pope, chief global market strategist at Cantor Fitzgerald in London, who has a ``buy'' recommendation on the shares. ``It has also long been recognized that the model range VW offered had several gaps. Those gaps were akin to `opportunities lost.'''

Volkswagen fell as much as 2.26 euros, or 1.5 percent, to 153.35 euros in German trading and was down 0.5 percent at 154.88 euros as of 2:32 p.m. in Frankfurt. The stock has fallen 0.8 percent this year.

The company nominated Wolfgang Porsche, whose family controls the company's largest investor, to succeed Heinrich von Pierer on its supervisory board. The move gives sports-car manufacturer Porsche SE four of the 10 board seats held by Volkswagen shareholders.

Porsche, the maker of the 911 sports car, owns 31 percent of Volkswagen and announced plans March 3 to raise the stake to more than 50 percent. The Stuttgart, Germany-based company is locked in a battle with Volkswagen's labor leaders over the allocation of worker seats on Porsche's supervisory board and legal protections of labor representatives' veto powers.

Labor `Clarity' Needed

``We hope very much that the current dispute between the Volkswagen works council and Porsche will soon be resolved amicably,'' Winterkorn said. ``We need clarity. We must deploy our teams and finally start controlling the game together.''

The sports-car manufacturer opposes draft legislation in Germany's parliament that would maintain the rights of labor leaders and the state of Lower Saxony to block major decisions at Volkswagen, such as factory closures.

Porsche's control of the carmaker has been hampered by Germany's so-called Volkswagen law, which has restricted voting rights to match those of Lower Saxony's 20 percent stake. The government is drafting a new version of the law after the European Union's highest court ordered in October that it either be rewritten or scrapped.

Winterkorn said reporters misinterpreted his comment at the Geneva International Motor Show on March 4 that he didn't need a Volkswagen Law, a remark that prompted outrage among labor leaders.

``I said that I don't need a VW Law in the old form,'' he said today. ``I did not say that I don't need a VW LAW at all.'' He declined to comment on the government's new proposal, saying it isn't a matter for the management board to decide.

North American Losses

The carmaker is struggling to end five years of losses in North America as the euro has strengthened against the dollar. Volkswagen's revenue in the region last year fell 9.5 percent to 13.2 billion euros ($20.6 billion). The carmaker, which stopped providing earnings figures for its U.S. operations in 2007, is considering building a plant in the country.

``We are concentrating on locations in the U.S. for a new North American plant,'' Jochem Heizmann, Volkswagen's production chief, said at the press conference. The carmaker will decide in mid-2008 on whether to set up the factory, which would open in two to three years and build about 150,000 cars a year, he said.

Winterkorn said in an interview that he may introduce the new version of the Sharan van in the U.S. Marketing of a new pickup truck will focus on South America and Asia, while the vehicle is unlikely to be put on sale in North America, he said.

Currency Hedging

The carmaker is hedged through 2012 against the dollar's decline versus the euro, with a higher level of hedging in the next two to three years, Chief Financial Officer Hans Dieter Poetsch said. Currency shifts hurt operating profit by 500 million euros last year.

Winterkorn said he doesn't rule out acquiring another brand after buying a majority stake in Swedish truckmaker Scania AB last week. Poetsch added that the carmaker currently has no plans currently to take control of Munich-based commercial-vehicle maker MAN AG, in which Volkswagen is already the largest shareholder.

Net income in 2007 increased 50 percent to 4.12 billion euros, while earnings before interest, tax and special gains or costs rose 40 percent to 6.15 billion euros, Volkswagen said Feb. 29. Revenue gained 3.8 percent to 108.9 billion euros. Deliveries rose 7.9 percent to a record 6.19 million vehicles.

Record 2008 Forecast

Group operating profit, revenue and vehicle sales this year will exceed the records set in 2007, Volkswagen said today, reiterating last month's statements. Deliveries in the first two months of this year increased 11 percent to 952,500 vehicles, the carmaker said today, repeating figures provided earlier this month at the Geneva show.

``With these figures and outlook, it's pretty hard to find any hair in the soup,'' Juergen Meyer, who helps manage 1.2 billion euros in investments, including 700,000 Volkswagen shares, at SEB Asset Management in Frankfurt. ``The free cash flow in 2008 should clearly increase.''

Winterkorn earned 5.15 million euros in salary, benefits and bonuses during his first year as CEO, up from 1.93 million euros in 2006 when he was running the Audi luxury unit. Combined pay and other compensation for the six-member management board gained 20 percent last year to 16.5 million euros.

Golf, A4 Demand

The Volkswagen brand's operating profit in 2007 more than doubled to 1.94 billion euros as vehicle sales rose 7.8 percent on demand for the mid-sized Golf. Audi said March 11 that a new version of the division's best-selling A4 will help sales and earnings gain this year after 2007 net income rose 26 percent to a record 1.69 billion euros.

Mlada Boleslav, Czech Republic-based Skoda's operating profit rose 38 percent last year to 712 million euros as sales increased 15 percent to 630,000 vehicles, with the Fabia hatchback and Roadster multipurpose vehicle leading the gains.

The Seat division in Spain returned to profit last year, with operating profit of 8 million euros versus a loss of 159 million euros a year earlier.

``Anyone who tries to write off Seat is making a big mistake,'' Winterkorn said. ``We have returned to profit a year earlier than planned and my colleagues in Spain have big plans.''

The Volkswagen group's operating profit from its Chinese joint ventures rose 48 percent last year to 294 million euros, the carmaker said.

To contact the reporter on this story: Chad Thomas in Wolfsburg, Germany, via cthomas16@bloomberg.net.

Last Updated: March 13, 2008 09:35 EDT