Healthy worldwide sales fuel VW profits surge

Volkswagen, Europe's largest car-maker, yesterday reported a huge leap in first-half net profits of DM282m (pounds 123m), up 150 per cent from the same period last year.

Hans-Peter Blechinger, a spokesman for VW, said: "Increased sales of 14 per cent and strong earnings on financial services are the roots of the good results.

"Although competition in the market for small cars has increased incredibly, we were able to raise our share of the market in Europe from 16.7 per cent in January to 17.2 per cent in July. Compared with our competitors we did outstandingly well." The German car-maker, which includes the Czech Skoda manufacturer, said that group income from ordinary activities, the main benchmark used by industry analysts to evaluate the company, rose 45 per cent to DM891m from DM616m last year. Volkswagen's worldwide deliveries to customers rose by 12.6 per cent to 2 million vehicles in the period.

But the car-maker is losing market share in its very own and biggest market, Germany, which accounts for 25 per cent of total sales. Here market share fell by 1.5 per cent to 27.3 per cent.

"Our German performance was below average. But in the growth markets such as Asia or South-America we realised growth rates up to 36 per cent," Mr Blechinger explained.

Volkswagen was happy with its performance in the UK market. Mr Blechinger said: "We improved our market share in Britain from 4.0 per cent in the first half of 1995 to 5.41 per cent in the same period this year. This is a fantastic result - but we won't be satisfied with it for long."

Volkswagen is currently at the centre of a row between the European Union and the state of Saxony over subsidies worth billions of German marks for constructing a new car-plant near Dresden.