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Porsche still plans to merge with VW    

Volkswagen's boss stated Thursday his intention to merge Volkswagen with Porsche but said the luxury sports car company had to resolve its financial problems first.

"Alliances and partnerships are an important instrument" as the group works towards becoming the world's biggest car maker by 2018, VW boss Martin Winterkorn said during an annual press conference.

And his intentions towards Porsche "have not changed," Winterkorn added.

VW owns 49.9 per cent of Porsche AG , the company that builds the iconic 911 sports cars, and it wants to acquire the rest to make it the group's 10th brand alongside Audi, Bentley and Lamborghini.

Integrating Porsche would help VW achieve economies of scale and provide access to handsome profits from Porsche's operations.

But Porsche must improve its overall financial situation first, the VW boss stressed.

"A first step towards a merger was taken with the purchase of Porsche Holding ... the next is a Porsche capital increase," Winterkorn said.

VW bought Austria-based Porsche Holding earlier this month for $4.5 billion.

That money is to be used by the Porsche and Piech families to take part in a capital increase aimed at cutting the debt of six billion euros that Porsche Holding racked up during a failed attempt to take over the much larger VW in 2008.

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