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VW To Export New Beetles to Europe

August 19, 1998

PUEBLA, Mexico (AP) _ After averting a strike with its largest union, Volkswagen is set to start exports of its New Beetle to Europe and other markets, company officials said Wednesday.

Volkswagen Mexico, which began exporting the New Beetle to the United States and Canada earlier this year, will soon start exports to Europe and South America, said Gerhard Rieder, the company’s financial director.

According to preliminary company estimates, sales of the New Beetle could be even greater in Europe than in North America, said company spokesman Michael Wijers.

``Our expectations today are much greater because worldwide demand appears to be bigger than we anticipated,″ he said.

Volkswagen’s original estimate for North American Beetle exports was 55,000 units a year; the figure is now closer to 70,000. Sales in Europe could top 100,000 Beetles a year, Wijers said.

Last Monday, Volkswagen reached a deal with its largest union just before a strike deadline. The Independent Union of Volkswagen workers entered the talks seeking a 35 percent pay increase, but settled for 21 percent and other non-wage benefits.

Europe’s largest car maker employs 15,800 people at its Puebla plant southeast of Mexico City, about 10,000 of whom belong to the union.

Puebla is VW’s only production site for the New Beetle. The plant also manufactures Jettas and Golfs for the local and export market as well as its old-fashioned Beetle for the domestic market.

Thanks to increased exports and a recovery in the domestic market, Volkswagen’s production has increased steadily from 260,000 vehicles in 1997 to an estimated 360,000 units this year, and could top 400,000 in 1999, Rieder said.

A few months ago, Volkswagen regained the lead in domestic market share in passenger cars, which it dominated for 25 years before the 1994-95 economic crisis.

``Right now, we’re running neck-to-neck with General Motors, and that helps us stay competitive,″ Wijers said.

Volkswagen began operations in Puebla, its only plant in North America, 34 years ago. The location was chosen because of its proximity to Mexico City and the port of Veracruz in the Gulf of Mexico, from which the company can ship parts and vehicles between Mexico and Europe.

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