Volkswagen said on Monday that it expected to sell more than 600,000 of its new Golf models next year, the car it is banking on to boost profits and reverse its flagging fortunes, Reuters reported.

"Sales of Germany's most important car are expected to exceed 600,000 units from 2004 - the first full sales year," VW reportedly said in a statement ahead of the unveiling of the model.

Reuters noted that VW has in the last two years lost market share to France's PSA/Peugeot-Citroen SA and Japanese rivals with fresher product lines, and the group expects a significantly lower operating profit this year from last year's $US5.2 billion.

Declining demand for cars in Europe and the United States creates pricing pressure, and the mid-sized car sector that the Golf once comfortably led has become more competitive than ever, the news agency added.

Reuters said that VW has produced more than 22 million Golfs since launching the first generation in 1974, making it the second most popular car in the world after Toyota's Corolla - the car traditionally accounts for a fifth of VW's group sales and half of profits at the VW brand.

In July, VW said it aimed to build 135,000 of the new Golf this year and that production would be in full swing in the second quarter of 2004, Reuters noted.

But the Golf faces tough competition not only from traditional rivals such as Opel's Astra, also being updated this autumn, but also from multipurpose vehicles such as Renault's Scenic and VW's own [Golf-based] Touran minivan, the report added.

Reuters noted that JD Power LMC analyst Charles Young has said the Golf V may not match the previous generation's peak sales of about 700,000 in Western Europe reached in 1999 - he predicts annual sales of something more than 600,000 units.

The Golf launch is a key test for Bernd Pischetsrieder, the former head of BMW who took over as VW chief executive in April last year, Reuters said.

He has been criticised by investors for failing to make his mark on the company, whose brands range from Skoda, VW and Seat to Audi, Bentley and Lamborghini, Reuters noted.