Nov. 18 (Bloomberg) -- Volkswagen AG, Europe's largest carmaker, reiterated it will invest 580 million euros ($730 million) in India as the company expects car demand to recover.

The Wolfsburg, Germany-based Volkswagen will also start selling vans in India in the first half of next year and the Polo compact car in 2010, Joerg Mueller, president of the Volkswagen Group in India, said in New Delhi today at the World Economic Forum's India Economic Summit.

Car sales in India have declined in three of the past four months as higher interest rates and slowing economic growth discourage people from buying vehicles. Still, Volkswagen, Ford Motor Co. and General Motor Corp. are investing billions of dollars in India to expand, betting that demand will revive faster in the South Asian nation than elsewhere.

``We are quite optimistic about India. We see opportunities,'' Mueller said. ``We don't have a liquidity crisis at Volkswagen.''

Volkswagen is building a new factory in Pune, India, with a capacity to manufacture 110,000 cars annually. The carmaker sells the Jetta and Passat sedans and the Touareg sport-utility vehicle in the country. It aims to set up 15 dealerships in India this year and 100 by the end of 2011.

Audi AG and Skoda Auto AS, Volkswagen's units, also sell cars in India. Combined sales of the three brands in India rose 69 percent in the first half of 2008 to 10,366 cars, Volkswagen said in a release in July.

To contact the reporters on this story: Kartik Goyal in New Delhi at kgoyal@bloomberg.net; Vipin V. Nair in Mumbai at Vnair12@bloomberg.net.

Last Updated: November 18, 2008 02:26 EST