VW steers profit goal lower

VW hopes the Phaeton will drive growth in the second-half of the year

FRANKFURT, Germany (CNN) -- Volkswagen warned on Tuesday it would not meet its profit target as Europe's biggest carmaker loses customers to competitors.

The company said pretax profit would come in at "around four billion euros" for the full year. It had previously said it would match last year's record 4.4 billion euros.

Volkswagen (VW) has been hurt by weak demand in its key markets in Europe and the United States because of its aging Golf and Passat models, which are losing out to newer models from the likes of Peugeot and Ford.

Net income in the first half fell 3.5 percent to 1.4 billion euros, or 3.64 euros a share, from 1.45 billion euros, or 3.84 euros, in the year-ago period. But second-quarter profit rose 24.4 percent to 776 million euros, while analysts polled by Reuters had expected a figure around the 645 million euros.

Sales fell 3.2 percent to 44 billion euros.

MORE STORIES • VW investors look for hope  • Ex-BMW boss to lead VW  • European car sales in reverse  • VW profit drops by a quarter  • Volkswagen may miss sales target

Analysts have predicted European car sales could fall by as much as five percent this year and German automotive industry association VDA expects new car unit sales to fall to 3.2 million this year in Germany, down from 3.34 million vehicles last year, amid continued economic gloom in VW's home market.

"The numbers look OK to us on a Q2 (second quarter) basis. Obviously they are steering people towards four billion (euros) for the full year. There was speculation out there that it was going to be a profit warning. If this is it, we are not particularly worried because it is not severe," Xavier Gunner, analysts at UBS Warburg, told Reuters.

"Steering people toward four billion is not a big problem. We knew the second half of the year was always going to be difficult, they are going to be dealing with the runout of the new Golf ahead of the new launch next year."

The company, which makes the New Beetle, Golf and Passat, and owns luxury marques -- Audi, Lamborghini, Rolls-Royce and Bentley, is hoping that new models like the VW Phaeton, Polo and Seat Ibiza will pull in buyers to its showroom.

New Chief Executive Bernd Pischetsrieder has already moved to make sure the separate arms of the company do not compete for the same customers.

Volkswagen's stock (FVOW), which has fallen almost 18 percent from its March peak of 62.15 euros, inched up 0.1 percent to 44.71 euros in early Frankfurt trading on Tuesday.