VW's van division boosts profit on Europe rebound, cost cuts

BERLIN (Reuters) - Strong demand in core European markets and cost cuts drove earnings at Volkswagen's (VOWG_p.DE) commercial vehicles division to a new record in 2014.

Having increased overall deliveries despite slumping demand in South America, its second largest market, VW's van division was upbeat on 2015 prospects, counting on demand for second-quarter launches of the overhauled Caddy and T6 models.

"There are enough challenges but VW's commercial vehicles division will cope well in international competition with new models and efficient plants," Chief Executive Eckhard Scholz said on Wednesday.

Operating profit at the van division, which accounts for about 5 percent of VW's 202.5 billion euros (146.5 billion pounds) of group sales, jumped 13 percent to 504 million euros, VW said.

VW's commercial vehicles division tops the market for vans, light commercial vehicles and pick-up trucks in Europe as well as Germany where it accounts for a fifth and a third of sales respectively.

Deliveries rose 2 percent to 445,000 vehicles, powered by 6.5 percent growth in western Europe where VW's van division sells two thirds of its models, the Hanover-based unit said.

Cost cuts "in all areas" helped 2014 profit, VW said, citing measures in purchasing, development, production and sales without giving details.

Europe's largest automotive group has embarked on a cost-cutting drive across its multi-brand structure including luxury division Audi to plug a profit gap with rivals such as Toyota Motor Corp and Hyundai Motor Co .

VW is aiming to lift cost savings at its core autos division alone to 5 billion euros per year from 2017 and last week said it has identified steps to achieve half of that target.

(Reporting by Andreas Cremer; Editing by Keith Weir)