VW Lowers Auto Prices, Adds Features To Polo, Passat

WOLSFSBURG, Germany November 22, 2002; Dow Jones reported that Germany's Volkswagen AG Friday said it is lowering prices on more cars and adding features at no cost to buyers.

Europe's best-selling auto maker said the move is meant to pass on to customers savings it has achieved, though analysts say carmakers in Europe are offering more discounts, cheap financing and free equipment to try to offset the economic and auto market slump.

"This step, independent of the current economic situation, will further secure our position as the market leader in Germany and Europe," the company said in a press statement.

VW said it will, from Saturday, sell its Polo and Passat models in Germany with the same price strategy for discounting that it has been using for the Golf. This applies to a new two-door version of the small Polo, as well.

Such sales incentives aren't as rampant here as in the U.S. market, but observers say incentive levels are escalating in Europe.

In general, sales incentives can help buoy vehicle sales, but analysts and insiders say they erode margins and often lead to a big drop in demand if car companies later withdraw them.

The relative age of the key Golf model compared to competitors' cars has been a particular problem for VW, and a reason it has been offering incentives, analysts say.

VW officials weren't immediately available for comment.

Company Web site: http://www.volkswagen.com