Volkswagen, Europe's largest car-maker, suggested it was reaping the rewards of its cost-cutting measures as it saw operating profit climb by 49.3%.
The owner of the VW ,Seat, Bentley and Skoda brands is encouraging early retirement and voluntary redundancies as it tries to slash thousands of jobs.
It made 1.3bn euros ($1.67bn; £890m) quarterly profit on 26.5bn euros sales.
Meanwhile DaimlerChrysler's underlying profit rose 11% to 1.86bn euros thanks to its flagship Mercedes brand.
This offset decreases in earnings suffered at its Chrysler division in the US, which is engaged in a price war in the tough North American market.
Volkswagen saw its shares rise by 8% on Germany's Dax-30 index.
It comes one day after its French rival PSA Peugeot Citroen saw its shares fall by over 10% amid concerns over profits.
Volkswagen's biggest challenge is to reduce the high costs of its main German plants, as it battles against tough competition from Asian car makers.
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