Trailing the pack, VW unveils new offroader

PARIS, Sept 26, 2002 Michael Steen reporting for Reuters from The Paris Auto Show said that Volkswagen AG, Europe's biggest carmaker, took the wraps off its new sports utility vehicle (SUV) at the Paris motor show on Thursday, insisting that its late entry into a booming but crowded market segment would not hinder sales.

VW is showing off the new bulbous Touareg luxury offroader, named after an African tribe that lives in the desert, several years after rival carmakers sparked a craze for SUVs in the United States.

"The market will tell us if we were too late," said VW Chief Executive Bernd Pischetsrieder. "But look at the Sharan (minivan). We were late with that and still became market leaders."

Volkswagen hopes to sell up to 70,000 of the four-wheel drive cars a year by 2004 -- about 10 percent of the current market -- for prices ranging from 35,000 to 70,000 euros ($34,000-68,000) and with the majority of sales in the United States.

The launch came as Volkswagen revealed it now expected to sell 4.975 million vehicles worldwide this year, down from 5.08 million units last year. The company has been hurt by weak markets and an ageing model line-up.

But helped by the Touareg and other launches, the carmaker plans to reach five million vehicles again in 2003, said Detlef Wittig, the board member in charge of VW brand marketing.

Shares in Volkswagen were trading up 7.61 percent at 39.43 euros by 1651 GMT, outperforming the European auto sector which was up 5.48 percent.

Sales of the Touareg may also be spurred by its common underpinnings with sportscar maker Porsche's new SUV, the Cayenne. The chassis of both cars was jointly developed by VW and Porsche and is being built by VW.

The principal difference between the two cars is the enormous 4.5-litre petrol engine Porsche has developed for its version, and a steeper price tag of either 100,000 euros or 60,000 depending on whether you need to get from 0 to 100 kilometres an hour (62 miles an hour) in 5.6 or 7.2 seconds respectively.

The Volkswagen has similar looks and its V10 turbo diesel engine can sprint to 100 kmh in 7.8 seconds. Both Porsche and VW nonetheless deny that their cars will be competing against each other because Porsche fans want the fastest car possible and VW buyers are keen on value for money.

"We are approaching totally different customers," said Bernd Wiedemann, a senior VW executive, adding that the Touareg also distinguished itself from other SUVs by being equally good on and off the road.

"This part of the market has only been partly touched by Land Rover so far," he said.