VW braces for "tough challenge", relies on global footprint

WOLFSBURG, Germany, March 14 Thu Mar 14, 2013 5:07am EDT

WOLFSBURG, Germany, March 14 (Reuters) - Volkswagen is bracing for a "tough challenge" this year, relying on overseas demand to offset slumping sales in its core European region, Chief Executive Martin Winterkorn said.

Two-months global sales rose 8.3 percent to about 1.4 million vehicles, the CEO said at the car maker's annual press conference on Tuesday, without being more specific.

VW said on Monday that sales of its main namesake brand, accounting for almost a third of group profit, slumped 8 percent in Europe where the region's biggest auto manufacturer sells a third of group vehicles.

"We have to really put our shoulders to the wheel and give our very best," Winterkorn said at VW's base in Wolfsburg. "The environment is definitely a tough challenge, especially for European car makers."

Operating profit at the VW brand fell 4.1 percent last year to 3.64 billion euros ($4.7 billion), while Czech division Skoda suffered a 4.2 percent drop to 712 million euros, VW said in its annual report published on Thursday.

The importance of markets "is shifting towards Asia, Eastern Europe and South America," Winterkorn said, adding VW will expand production in China. "We're prepared for this situation." ($1 = 0.7722 euros) (Reporting by Andreas Cremer)