March 4 (Bloomberg) -- Volkswagen AG, Europe's largest carmaker, said it won't bring its resurrected Scirocco sports hatchback to market in the U.S. because of the dollar's decline versus the euro.

``The exchange rate is the only reason for not selling it in the U.S.,'' Detlef Wittig, the German company's sales and marketing chief, said last night in an interview at the Geneva International Motor Show. ``This car would fit the U.S. market but at the current exchange rate we wouldn't make any money.''

The dollar's fall to an all-time low against the euro this week has made Volkswagen's need for a U.S. plant all the more critical, Wittig said. The Wolfsburg, Germany-based carmaker has ``in these last days started the selection process by looking at various locations all over the U.S.,'' he said.

Volkswagen has been losing money in North America since 2003. Stefan Jacoby took over as U.S. chief on Sept. 1 and a month later announced plans to move the regional headquarters to Virginia from Michigan, eliminating 400 of 1,400 jobs. Volkswagen has ruled out Canada as a location for a North American factory, Wittig said, adding that a final decision on a plant should come before the end of June.

``This stance indicates that U.S. conditions are far worse than imagined,'' said Stephen Pope, the chief global market strategist at Cantor Fitzgerald in London, who has a ``buy'' rating on the shares. ``It raises doubt whether other models in the expanding VW range can be sold stateside for a profit.''

Volkswagen fell 1.03 euros, or 0.7 percent, to 151.32 euros. The stock has declined 3.1 percent this year.

Sales Gain

Two-month group sales rose about 9 percent, led by gains of 10 percent at the namesake brand and 15 percent at the Czech Republic-based Skoda unit, Wittig said today.

Volkswagen last night showed the revived Scirocco, which will come to market in Europe later this year, as well as the next generation of the Skoda Superb, the division's most expensive offering. The cars are two of 30 models the group will introduce worldwide in the next two years, Wittig said.

Volkswagen will assemble the Scirocco in Palmela, Portugal, where VW already builds the Eos convertible. Wilhelm Karmann GmbH, a German maker of specialty cars, built the original Scirocco for Volkswagen in Osnabrueck, Germany. Almost 796,000 were sold worldwide between 1974 and 1992.

Scania Stance

Board chairman Ferdinand Piech said at the briefing he has no plans to directly merge truckmaker Scania AB, in which Volkswagen yesterday bought majority voting rights, with the VW commercial-vehicles unit and MAN AG, in which the carmaker is the largest shareholder. Volkswagen had previously said it was interested in a possible three-way fusion.

Piech, 70, said he'll explain in coming weeks why he decided yesterday to step down from the executive committee of the board of Porsche SE, which his family controls, in favor of brother Hans Michel, adding that he has a good relationship with Wendelin Wiedeking, Porsche's chief executive officer.

Wiedeking announced yesterday that Porsche's board had approved plans to raise the Stuttgart, Germany-based sports-car carmaker's stake in Volkswagen to more than 50 percent. Porsche currently owns 31 percent.

Volkswagen Chief Executive Martin Winterkorn said last night he ``heartily welcomed'' Porsche's announcement and that he agrees VW ``doesn't need'' a special law to protect it. Porsche opposes draft legislation in Germany's parliament that would maintain the rights of labor leaders and the state of Lower Saxony to block decisions such as factory closures at Volkswagen. The draft proposal came after Europe's highest court in October ordered Germany to scrap the so-called Volkswagen Law or come up with an alternative.

Superb Sales

Wittig, who ran Skoda until taking up his new post last year, said he expects the new Superb to double the model's sales to as many as 50,000 vehicles annually. He declined to give a sales target for the Scirocco.

In reviving the Scirocco, Volkswagen is banking on nostalgia for a model popular in the 1970s and 1980s, when it featured in TV and film. The car takes its name from the Italian word for a warm southeast wind in the Mediterranean.

``It's an every-day car and it will be priced affordably to attract young customers,'' Wittig said.

Volkswagen has also brought back the Rabbit in the U.S., renaming its best-selling Golf model for the world's largest auto market. Volkswagen released a new version of the Beetle in the late 1990s.

Competitors are also trying to take advantage of consumers' desire for new versions of older models. General Motors Corp. will bring back the Chevrolet Camaro sports car next year and Chrysler LLC will introduce a new Dodge Challenger coupe.

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

Last Updated: March 4, 2008 12:33 EST