Volkswagen brand to post record profit on SUVs, cost cuts: executive

FILE PHOTO: Volkswagen sign is seen during the annual earnings news conference of VW in Berlin in Berlin, Germany, March 13, 2018. REUTERS/Hannibal Hanschke

WOLFSBURG, Germany (Reuters) - Volkswagen's VOWG_p.DE namesake core brand is on track to post a record operating profit this year thanks to cost savings and its increased sales of sports utility vehicles (SUV's), a senior manager of the unit said.

The Wolfsburg-based group faces heavy investments into cleaner and self-driving technologies and is has increased sales share of higher-margin SUVs to help fund an industry-wide shift toward low emission vehicles.

VW’s core brand in 2019 has gained market share and has increased its operating profit substantially, Chief Operating Officer Ralf Brandstaetter said on Wednesday in comments embargoed for Thursday.

He added the division had increased its share of SUVs sold to 42% in the United States and 37% in Europe.

Of envisaged cost savings of 3 billion euros by 2020, 2.6 billion euros have been realized at the end of 2019, Brandstaetter said.

“On this basis, we can secure profitability so that we can systematically invest in the electrification and digitization of our products,” the executive said, referring to both cost cuts and the increased share of SUVs.

He cautioned though that costs in German plants were still too high and that productivity must be increased there.

Reporting by Jan Schwartz; writing by Thomas Seythal; Editing by Edward Taylor