Volkswagen will roll out more than 20 new models by the end of the decade in a bid to boost sales to 8 million vehicles in 2011 and close the gap with Japan's Toyota.
While Volkswagen unveiled key details of its strategy last Thursday, Bavarian carmaker BMW AG posted results that for the first time this year met expectations and announced the departure of one of its most senior executives.
After shedding thousands of jobs, a leaner Volkswagen has aggressively expanded its market share in Europe, mainly at the expense of French rivals Renault and PSA, while intensifying a push into emerging markets.
"There are 300 million people in China poised to buy their very first car. In Russia there are 70 million. And in Asia, 250 million people aspire to motorised mobility," Chief Executive Martin Winterkorn told VW's annual news conference.
Confirming his 2008 target for new highs in vehicle sales, revenue and operating profit, the Volkswagen CEO pledged to meet future demand by entering into all new segments and expanding its model range of cars, SUVs, vans and pickups.
VW sold a record 6.2 million vehicles last year to remain fourth in the industry by volume. Toyota and General Motors each sold nearly 9.4 million units.
VW has now turned its sights on overtaking far larger rival Toyota as the world's biggest and most profitable carmaker.
Backed by VW's largest shareholder Porsche, Winterkorn showcased a long-term attack plan that includes expanding in the heavy truck market through the integration of Sweden's Scania AB as its ninth brand in an automotive empire that generates nearly €120bn in sales.
But he dampened speculation that VW would soon raise its own stakes in Scania and Germany's to foster a three-way merger that would create Europe's truck market leader. "We do not currently see any further pressure to act," he said.
Merger of talents
Winterkorn appealed to his blue-collar staff to drop their dispute with Porsche and help unite the two carmakers in a deal he likened to merging the talent of the two best players from their hometown soccer clubs in Wolfsburg and Stuttgart.
"We are extremely pleased about this move and we're looking forward to even closer cooperation soon," Winterkorn said about a takeover by Porsche that VW employees deem "hostile".
Chief Financial Officer Hans Dieter Poetsch played down the impact of volatile financial markets.
"We don't expect these to directly affect our business activities, not even in our Financial Services division," he said, adding that Volkswagen Bank's was able to securitise automotive loans worth €1.25bn euros in January.
With the euro marking a fresh high above $1.56, VW said it would concentrate on its search for a new North American plant and reach a decision this summer on where to start building.
Foreign exchange headwinds reduced the group's operating profit last year by 500 million euros, a figure that would have been more than twice as high had VW not hedged currency risks.
VW said a North American plant would initially build between 100 000 and 150 000 vehicles a year and has suggested it could eventually build some 250 000 units annually.
Management acknowledged that much of the improvement at its flagship VW brand stemmed from restructuring measures under former CEO Bernd Pischetsrieder, including a landmark accord in 2006 that forced the 80 000-odd workforce in its six western German plants to work longer hours without compensation.
"This agreement led to an enormous cost relief" of around €500m, personnel chief Horst Neumann said.