Volkswagen's Cost Cuts Boost Profits

Auburn Hills July 27, 2007; The AIADA newsletter reported that Volkswagen will meet its 2008 pretax profit target of 5.1 billion euros ($7 billion) a year earlier than planned as cost cuts boost results, the group said, sending its shares sharply higher.

According to Automotive News, Volkswagen said it would "significantly" exceed in 2007 the previous year's figure before special items as it goes on to sell over 6 million cars for the first time ever.

"The increase in unit sales and the continuous optimization of cost structures will lead to a sustainable improvement in competitiveness and our earnings power," the world's fourth-largest carmaker said in a statement.

The news comes amid a spate of forecast-beating results from European rivals. Renault and PSA of France both expanded their first-half margins faster than expected while Fiat's car business more than doubled its quarterly trading profit. "Overall it's pleasing. It fits perfectly with the European auto story - stable growth in earnings," a trader said.

Earlier this month, Volkswagen reported a 7.8 percent increase in first half vehicle sales to 3.09 million units, thanks mainly to strong growth in emerging markets like Asia and South America.