VW reports record profits

Volkswagen's beetles have a cult following

Volkswagen - maker of the much-loved Beetle and the revered Bentley - has seen its net profits soar by 144.2% to 4.032bn Deutsche Marks (2.062bn euros, £1.295bn).

Pre-tax profit rose 37.5% to 6.784bn marks against 4.933bn marks the previous year.

And Volkswagen is continuing to expand its UK operations, aiming to boost its production from 2,000 to 9,000 cars over the next five years.

The news comes at a difficult time for the global car industry which is suffering from over-capacity, and when competitors such as Daimler Chrysler and Ford are slashing production estimates.

Efficiency boost

Volkswagen admits that reduced demand in the wider car industry means that it must cut costs and raise efficiency next year.

But it expects its new range of cars to reap increased profits in 2001 nevertheless.

"We expect a qualitative improvement in earnings, above all due to the success of our new range of products, for example the new Passat and the new A4 Audi," said the company in a statement.

Shareholder bonus

During the year, Volkswagen's global production grew by 6.2% to 5,156,000 cars while its workforce expanded by 5.9% to 324,402.

In the UK, the production of the new Mid Size Bentley (MSB) model at the plant in Cheshire will create 700 jobs over the next two to three years.

Volkswagen's share price rose on the back of the positive results, climbing 1.61 euros to 58.91 euros at 1730 GMT.