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Auto Industry

VW Group posts profit as flagship brand falters

The leading European automobile group, Volkswagen, is close to overtaking Toyota as the world's biggest car manufacturer. It has reported a jump in quarterly profits thanks to strong demand in China.

Europe's biggest carmaker, Volkswagen, posted a robust quarterly net profit on Thursday even though its flagship VW brand has watched earnings tumble nearly half a billion euros in the last year.

The German consortium said its net profit surged 12.5 percent to 3.2 billion euros ($4.3 billion) in the quarter from April to June thanks to growth in China and strong performances from its luxury brands Audi and Porsche.

Volkswagen said rising demand in China had allowed it to compensate for weaker business in other markets. It also traced the positive figures back to profit growth at Audi and Porsche.

With its portfolio of 12 brands, the VW group moved 5.07 million units in the first half of the year - an annual spike of 5.6 percent. The group's quarterly sales amounted to 51 billion euros. Rival Toyota sold 5.09 million units in the same period.

But the VW brand itself watched its operating profit plunge to 1.01 billion euros during the first six months of the year from 1.49 billion euros in the same period last year.

In the second quarter, carmaker VW said its profit dropped 3.1 percent on decreased demand in Eastern Europe, vicious international competition and a strong euro.

"Sales in Russia and Ukraine in particular recorded a significant decrease due to the political tensions in recent months," a company statement said.

Passenger car deliveries to Russia were down 8.1 percent in the first half of the year compared to the same period last year.

But Asia provided a counterweight to that decline with deliveries to the region, and especially China, jumping 15.9 percent.

cjc/uhe (AFP, dpa)

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