Russia will become Europe's biggest car market in 2009, overtaking Germany, Volkswagen's chief executive told reporters late on Wednesday during the group's official opening of its new plant in Kaluga outside of Moscow.

GM Europe finance chief Luca Maestri told Reuters recently that Russia could become Europe's second-largest car market, after Germany, next year.

VW CEO Martin Winterkorn said demand for new cars is expected to rise in eastern Europe next year, while western Europe should stagnate due in part to continued weak sales in Germany, CEO Martin Winterkorn said.

He added that the planned factory in India should also churn out the same annual output of 150,000 vehicles as Kaluga after the new site in Pune in the state of Maharashtra goes onstream early in 2008.

Winterkorn added that talks with troubled Malaysian carmaker Proton (PROT.KL: Quote, Profile, Research) over a cooperation for the southeast Asian market, including a possible equity stake, were definitively over.

I don't want this anymore, he said.

The Volkswagen CEO reaffirmed management's aim to boost productivity by 10 percent annually although he plans to keep staffing levels in its six western German plants stable.

(Reporting by Jan Schwartz; Editing by Gary Hill)