Volkswagen's chief executive reportedly predicted in a newspaper interview that the Western European car market would show no growth next year.

"For next year... we are working with a scenario of a stable market, with no growth," Bernd Pischetsrieder told daily Les Echos, according to Reuters.

He also said the Western European car market would be "more or less stagnant" this year with Spain and Britain showing a rise.

"In Germany we will be lucky if the market reaches last year's level, particularly after July and August were the worst months in over 10 years," he said.

Reuters said he confirmed the company's 2004 target of a profit before taxes and special items of €1.9 billion. Exceptionals will not exceed €400 million, he said.

Pischetsrieder also said he was "moderately optimistic" over the outcome of talks with German unions this autumn.

Volkswagen has asked 103,000 workers at six plants in Germany to forego pay rises for two years as part of a broader plan to lop about €2 billion from labour costs by 2011, Reuters noted. Metalworkers' union IG Metall has demanded a 4% pay rise and a job guarantee for the next decade.