Hamburg - Europe's biggest carmaker Volkswagen AG plans to strengthen ties with its parent, the luxury sports car group Porsche, VW chief Martin Winterkorn said Thursday amid speculation that his company was weighing up mounting an audacious bid for Porsche.

VW is considering a push to take out a majority stake in Porsche as part of an effort to help bring relief to the indebted Stuttgart- based Porsche, London's Financial Times reported Thursday.

"We're both capable of forming the centre of strength in international carmaking," Winterkorn told shareholders referring to Porsche and VW corporate relations.

He went on to express confidence that VW and Porsche would strengthen their ties. "This alliance has enormous potential in technological and economic terms," he said.

"Our integration has come a long way in the last few months and I am sure that we will be able to drive our partnership forward in 2009, a difficult year for the auto sector," Winterkorn said.

VW shareholders gathered in the German city of Hamburg against the backdrop of a dramatic crisis in the global car industry, which has resulted in falling vehicle sales, a drop in production and a push to place employees on short-term work contracts.

A move by VW to build a majority stake in Porsche would also represent another extraordinary twist in two carmakers' recent corporate history after Porsche acquired a majority holding in Volkswagen of 50.8 per cent. Porsche has also signalled plans to raise its stake to 75 per cent.

Ahead of Thursday's shareholder meeting, VW reported what it described as "extremely weak" results for the first three months of this year with earnings slumping over the last three-quarters.

The Wolfsburg-based company said net profit tumbled by 74 per cent to 243 million euros (314.4 million dollars) in the first quarter of the year compared to the same period in 2008.

But Winterkorn told VW shareholders that although the group found itself in what he described as slippery terrain "we haven't lost our footing and remain firmly on track.

"Because one thing is certain: the markets will pick up again," he said. "And we are preparing very systematically for when this happens."

The scale of the crisis gripping the world car industry and the economic downturn meant that VW decided against issuing a forecast for future earnings. However, the carmaker warned it would be lower than in previous years.

VW said first-quarter sales dropped by 11 per cent to 24 billion euros. (dpa)