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VW crosses 10 million sales mark

Volkswagen Group delivered more than 10 million vehicles for the first time in 2014, reaching the annual-sales milestone four years earlier than originally targeted on the back of strong growth in China.

Deliveries, including Porsche and Audi cars and MAN and Scania heavy trucks, rose 4 percent to 10.14 million vehicles last year, the manufacturer said in a statement.

Beyond expanding sales, VW is “making good progress” on improving profitability and customer satisfaction, CEO Martin Winterkorn said in the statement.

Under Winterkorn, Volkswagen has focused on growth in its bid to surpass Toyota as the world’s largest automaker by 2018. VW narrowed the gap to about 72,000 vehicles in the first three quarters in 2014 compared with 227,000 a year earlier, paced by demand in China and surging sales of Audi and Porsche models. The Japanese company will report global full-year sales later this month.

Mainland China and Hong Kong accounted for a record 3.67 million vehicle deliveries at VW Group last year, up 12 percent and extending the country’s lead as the German manufacturer’s largest single market.

Audi’s global deliveries rose 11 percent to a record of 1.74 million vehicles. The world’s second-largest luxury brand is pushing BMW for the top spot and will unveil a revamped version of the Q7 SUV in Detroit next week as part of its effort to close the gap. Porsche sales surged 17 percent to 189,850 vehicles, lifted by the new Macan compact crossover.

Recalls last year haven’t hurt demand so far at VW, Toyota, or General Motors, which ranks third in global sales volume. Toyota and GM have been among 10 carmakers recalling a combined 7.8 million vehicles in the U.S. because of faults in air bags made by Takata Corp. While VW isn’t affected by that flaw, the company recalled 1.02 million cars in the U.S. and China because of a possible suspension defect.

The recalls that hit global automakers and their suppliers last year underscore growing complexity for vehicle manufacturers when pushing for economies of scale by sharing parts and components across a wide range of different vehicles. After years of emphasizing sales growth, acquisitions and adding factories across the globe, VW has shifted focus to boosting earnings power. Better returns will help offset even higher spending, with VW planning to invest about  €17 billion a year through 2019 on new vehicles, technology and upgrading its manufacturing network.

The goal for the VW brand, the company’s largest unit by sales volume, is to boost operating profit to at least 6 percent of sales by 2018 from a 2.3 percent margin in the first nine months of 2014. The cost savings are part of a companywide effort to become more efficient. Since Winterkorn became CEO in 2007, VW added the Porsche, Scania, MAN and Ducati brands. It also more than doubled the number of factories around the world to 107.