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Volkswagen Report Profits for Q1

Volkswagen has announced just recently that its flagship VW brand has gained profits for its first quarter of operation similarly it has gained 16 percent increase from its premium Audi brand as the company broke out unit results for the first time.

The profit gained by Europe's largest automaker for the first quarter is the result of the changes implemented by the new Chief Executive Martin Winterkorn in the company. According to Volkswagen Chief Financial Officer Dieter Poetsch, "The good market acceptance of our attractive models and the sustained benefits of our cost and process optimization programs are reflected in the figures for the individual brands. All group brands improved their operating profit."

Volkswagen has reported 386 million euros or $525.2 million operating profit for the first three months of the year comparing that to the 49 million euros that company lost in the same period a year ago. The increase is the result of the growing demand for new models as well as old favorites like the CrossGolf, CrossTouran, Polo, and others. The demand for Volkswagen vehicles have been increasing steadily across South America, Asia, and Europe.

Audi the luxury unit of Volkswagen and recipient of high-quality VW axles have also gained 16 percent increase to 410 million euros or $545.6 million from its previous 345 million euros. This increase is brought about by the high demand for the new A5 series and the launching of the new TT Roadster.

The Czech-based unit of Volkswagen, the Skoda Auto has also reported an operating profit of 20 percent to 172million euros or $234.01 million compared to its previous 143 million euros a year earlier. The increase is the result of the growing demand for the Fabia model.

Unfortunately not all of Volkswagen's subsidiaries have reported profit. VW's Spanish SEAT brand had an operating loss of 11 million euros or $14.97 million but its much lower compared to its previous loss of 32 million euros in 2006.

The Wolfsburg-based automaker has reported last month that it has been able to earn 740 million euros or $1 billion for the months of January to March. It's bigger compared to the 327 million euros that it has gained a year earlier. Sales also increase by 5.1 percent to 26.6 billion euros or $36.19 billion from previous 25.3 billion euros.

Volkswagen has also stressed that its global vehicle sales has increased by 7.9 percent in the first quarter to 1.47 million units. The automaker has been able to obtain big gains from its China and Eastern Europe markets while a modest gain was derived from its United States market. This has helped offset the decline in sales of Volkswagen vehicles in Germany where an increase in value-added tax rate is being implemented.

Although Volkswagen has been experiencing improvements in its North American market specifically in the US but it's not that high compared to what it has been getting from its other foreign markets. Poetsch also said that the company is still hoping to break even in the region by 2009 that is despite the fact that the sale declined by 9 percent to 3.2 billion euros or $4.51 billion last 2006.

The operating profit was not revealed but Poetsch said that the company was not profitable without saying how much of a loss it incurred. The revenues in VW's major European markets were up by 7.5 percent to 19.32 billion euros or $26.25 billion. For South African and South America sales were up by 5.5 percent to 2.29 billion euros or $3.11 billion, while in Asia and the pacific VW records an increase of 11 percent to 1.71 billion euros or $2.32 billion.

Volkswagen's China operation has reported an increase in operating profit of 34 million euros or $46.2 million for the first quarter which is more than twice the 15 million euros from a year earlier. Poetsch further added that the company is expecting to increase worldwide deliveries to customers in 2007 and exceed its 2006 sales tally of 104.9 billion euros or $142.72 billion. Volkswagen shares have also increased by 0.44 percent to 111.88 euros or $152.59 in Frankfurt.

About The Author Benjamin Hudson works as a supervisor at one of the top engineering firms in the business district of Louisiana. He is also a freelance journalist and has passion for anything automotive.
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