VW profit revs up as cost cuts ma­te­ri­alise

New Straits Times - - Business -

BER­LIN: Volk­swa­gen (VW) said profit at its trou­bled core di­vi­sion soared in the first quar­ter, a sign that long-over­due cost cuts are ma­te­ri­al­is­ing as the car­maker pushes a post-diesel­gate strate­gic shift.

First-quar­ter op­er­at­ing profit at VW’s largest di­vi­sion by sales surged to €869 mil­lion (RM4.09 bil­lion) from €73 mil­lion a year ear­lier, said the car­maker, join­ing ri­vals Daim­ler and BMW which have also re­ported bet­terthan-ex­pected quar­terly re­sults.

Struc­tural changes since the diesel emis­sions scan­dal broke in 2015 in­clude stream­lin­ing ve­hi­cle de­vel­op­ment, cutting ma­te­rial costs by re­duc­ing com­plex­ity in parts, drop­ping un­prof­itable mod­els and shift­ing more power to brands and re­gions to re­spond more quickly to mar­ket needs.

In­vestors have said a turn­around at VW’s name­sake brand, which tra­di­tion­ally has been sad­dled with high fixed and re­search and de­vel­op­ment costs, is key to turn the Ger­man be­he­moth into a more ap­peal­ing busi­ness, al­though VW last year eclipsed Toy­ota as the world’s big­gest sell­ing car­maker.

“Our ef­forts to im­prove ef­fi­ciency and pro­duc­tiv­ity across all ar­eas of the com­pany are also pay­ing off,” said chief ex­ec­u­tive Matthias Mueller. Reuters

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