The Volkswagen Group has announced a record 37.5% rise in profits in 2000, from £1.59 billion in 1999 to £2.19 billion last year. Sales in 2000 reached £53.9 billion (1999: £73.3 billion).

As a result of the announcement VW shares rose 3%.

The company warned, however, that cost-cutting would be necessary.

A statement from VW's board of management says: “In the year 2001 sales and profits will further increase. This will require significant efforts to raise efficiency and to reduce costs, because we have only limited expectations of impetus from market growth and the company will also be effected by model changes.

“We expect a qualitative improvement in earnings above all due to the success of our new range of products, as for example the new VW Passat and Audi A4.” VW's annual press conference is set to take place on March 22.