VW Says Markets More Challenging as March Sales Decline

Volkswagen AG, Europe’s biggest automaker, said markets are becoming “more challenging” after posting a sales decline at the namesake brand last month.

The Volkswagen marque’s deliveries in March fell 0.8 percent from a year earlier to 532,400 vehicles as demand plunged in the manufacturer’s home region, the Wolfsburg, Germany-based carmaker said in a statement today. First-quarter sales gained 5.2 percent to 1.43 million cars.

“Markets are becoming more difficult, and in some cases decidedly more challenging,” Christian Klingler, VW’s sales chief, said in the statement.

The VW brand’s first-quarter deliveries in Europe dropped 10 percent as sales in Germany, the region’s largest market, plummeted 15 percent. Auto executives are forecasting a sixth straight annual decline for the industry in Europe this year as the region’s waning economy stifles demand. Volkswagen’s financial-services division said today that economic growth in the world’s main industrial nations will remain “muted.”

VW fell as much as 1.9 percent to 153.20 euros and was trading down 1.4 percent at 12:22 p.m. in Frankfurt. The stock has declined 11 percent this year, valuing the company at 69 billion euros ($90 billion).

The carmaker forecast last month that earnings this year won’t grow, with first-quarter figures dropping from a year earlier, as the European sovereign-debt crisis leads to a sixth annual contraction in the region’s car market as industrywide sales expansions slow in China. Frank Witter, head of the financial-services division, said today that the unit’s operating profit in 2013 will probably match the 1.41 billion euros posted last year.

“Due to the rather weak economy we don’t expect significant interest rate increases in 2013,” Witter said at a press conference in Frankfurt. “The persistent debt crisis will continue to cause insecurity and volatility on financial markets.”

The Volkswagen brand’s first-quarter sales gained 7.3 percent in North America and 21 percent in the Asia-Pacific region, where Chinese and Hong Kong sales jumped 24 percent. Growth was held back by drops of 19 percent in India and 7.3 percent in South America.

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