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VW profit plunges, sees tough year-end

Europe's largest carmaker Volkswagen said business remained hard after third-quarter earnings plunged on Thursday while Japan's Mazda predicted a smaller full-year operating loss.

Car sales are heavily dependent on the state of the economy and consumer confidence. The Euro zone consumer sentiment index surged in October while in Japan, industrial production rose for a seventh consecutive month in September including an 8.2% rise in car production.

Mazda, Japan's fifth-largest automaker in which Ford Motor Co holds a 13% stake, cited better sales and currency rates than expected, saying it now expected an operating loss of ¥12 billion for the year to March, ¥1 billion less than it had forecast earlier this month.

Volkswagen, Europe's largest automaker by sales, warned that the business climate remained tough and said it still expected earnings to decline in 2009.

Car sales in Germany, Europe's largest car market, have risen in recent months after the government introduced a generous scrapping incentive scheme launched by the government to reward drivers for trading in old cars for new models. But with the scheme's funds now exhausted, sales are expected to tumble once more.

Still, the company said it should be able to gain market share at the expense of its competitors even if markets were falling.

In China, one of the last bastions of auto sales growth despite the crisis, the group's retail sales in the first nine months exceeded those in Germany for the first time.

Truck maker MAN said it expected 2010 profit at around the same level as 2009 and shares rose after the group beat forecasts.

Auto parts maker Continental posted a 1.04 billion euro third quarter net loss after a massive writedown, but said it would see a significant year-on-year improvement in the final three months and pledged to shore up its balance sheet while it renegotiates a €3.5 billion loan repayment. (Reuters)