Volkswagen Sees Net Profit Increase by 19%

The largest carmaker in Europe, Volkswagen announced Wednesday that its net profit had risen by 19% during the first three months of 2015, as the automaker in Western Europe began its recovery.

However, the earnings at VW, the second largest carmaker in the world after Toyota, continued to be dependent on Porsche and Audi, two high-end brands.

Cars with the insignia of Volkswagen were just marginally profitable, even though they accounted for the vast majority of the volume of sales.

The figures showcase the challenges Volkswagen is facing after Ferdinand Piech from the Porsche family left. He dominated the company for over 20 years but this past week resigned as the chairman of the supervisory board at Volkswagen after coming up the loser in a power struggle.

While the carmaker remains profitable as well as dominates the market in Europe, it has battled in the U.S. and is suffering from slumps in the economy of Brazil and Russia, which are big markets for the automaker. China growth has slowed down markedly.

Volkswagen said net profit was $2.9 billion euros equal to $3.2 billion during the first quarter of 2015 compare to $2.5 billion euros last year during the same period, Sales were up 10% to 52.7 billion euros.

Operating profit increased 17% to end the quarter at 514 million euros compared to last year at the same time of 440 million euros. The unit was helped from cuts in costs as well as some growth in markets in Europe such as Spain, that are now recovering from their year’s long economic crisis.

Despite improved earnings, the Volkswagen brand autos made a profit that was equal to 2% of their sales during the quarter, up from last year’s 1.8%, said company officials.

Together, Porsche and Audi vehicles accounted for profit that was four times as much as the Volkswagen brand even though they produce less than 33% as many vehicles.

Sales in the U.S. dipped 1.4% to 132,000 for the quarter, including Porsche and Audi. Volkswagen brand vehicles have only 2% of the market in the U.S. this year, which is down from approximately 3% in 2012.

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