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UPDATE 1-VW warns on sales but sticks to profit outlook

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VIENNA, June 21 (Reuters) - Europe's biggest automaker Volkswagen AG warned on Friday it might not maintain unit sales at the five-million-vehicle mark achieved last year, but stuck to a level profit outlook.

As car sales decline in western Europe, especially in VW's home market of Germany, volume carmakers are struggling to keep up sales and fierce price competition is putting pressure on margins.

Robert Buechelhofer, VW's board member in charge of sales and marketing, told journalists in Vienna it was hard to gauge whether VW would achieve last year's unit sales level.

"We hope (to reach five million vehicles) and are fighting with all our might for it," he said.

The carmaker said in May it planned to maintain its annual deliveries at last year's level, helped by the launch of the new VW Polo and sister brand SEAT Ibiza.

Western European car sales fell eight percent in May and are down 3.8 percent in the year so far.

Buechelhofer confirmed the company still expected to match its 2001 full-year pre-tax profit of 4.4 billion euros ($4.25 billion) this year.

VW's profits have been bolstered in recent years by strong exports, especially to the United States, helped by a strong dollar.

However, its shares have lost ground in recent days due partly to the appreciation of the euro against the dollar which some analysts fear could hit German carmakers' exports if it is sustained.

VW sells nearly one in five new cars in Europe but is at a low point in its product cycle as veteran models such as the Golf -- which will next week outstrip the Beetle in total numbers produced -- show their age compared with cars from rivals including France's PSA Peugoet-Citroen .

VW's market share has fallen to 18.1 percent from 19 percent a year ago while Peugeot's market share has risen to 14.9 percent from 13.8 percent.

At 1108 GMT, VW shares were down 2.56 percent, underperforming the Dow Jones European Auto Stoxx index which was down 1.4 percent.