Volkswagen increased operating profit in the first quarter on cost cuts and improving European auto demand. As Hayley Platt reports it gave them some respite after the shock ousting of Chairman Ferdinand Piech.
A new flagship Volkswagen showroom opens in Berlin just days after the shock departure of the company's Chairman. It was the first public outing for CEO Martin Winterkorn since Ferinand Piech resigned. VW is trying to look forward - and at least its profits in the first quarter were good. A 17 percent rise to 3.3 billion euros - the top end of analysts' forecasts. Even so, CMC Market's Jasper Lawler, says Piech may not have liked the dependency on luxury brands. SOUNDBITE: Jasper Lawler, Market Analyst, CMC Markets, saying (English): "Audi and Porsche contributed a large amount to this profit growth and if you look at some of the more sort of normal car divisions, actually it's a little bit tepid perhaps that's not surprising given the lacklustre economy that we're seeing in Europe and again that points to an over dependence on China which is also slowing." Sales in western Europe faired best, rising 6.5 percent to just over 380,000 vehicles. That offset weaker demand in the U.S. and even China, a major market for VW. The company's operating margin also increased by 2 percent. A sign that Winkerkorn's cost-cutting drive is bearing fruit. So too is French carmaker's Peugeot. They still lag peers, but revenues for the first quarter rose 4.6 percent. And unlike VW, China is providing good growth after joining forces with Dongfeng Motors. SOUNDBITE: Jasper Lawler, Market Analyst, CMC Markets, saying (English): "Their pushing up into China with that partnership and so that bodes well and we're already starting to see the results through this latest quarters profit increase, so that's positive for the company." Low interest rates on loans has helped make car buying easier in Europe. But high unemployment remains an issue. That could be a spoiler as car makers grapple for growth.