Flagging sales in the German home market did little to slow the profit earning potential of Europe's largest carmaker as VW exports boom.
The German market, accounting for a fifth of VW's sales, fell 3% in the first half of 2001. But VW expects sales and profit for the year to exceed last year's levels. Pre-tax profit in the first half of 2001 rose 17% thanks to strong overseas demand.
The weak euro helped sales in the US, where sales have stayed flat. But in the European market VW is still saddled with higher fixed costs than competitors Renault and Peugeot.
VW does not predict an improvement in domestic demand in 2001 or 2002.