Volkswagen’s Brazilian operations are running profitably after cutting fixed costs sharply, the unit’s head told a German newspaper.

“We are fully on track with our restructuring programme,” Hans-Christian Maergner told the Handelsblatt, according to Reuters.

“We reduced fixed costs more strongly than expected. Our figures are in the black again while running at 60% capacity,” he reportedly added.

Asked when the unit, whose weak performance has weighed on group results, would generate a full-year profit, he told the paper: “We have to accomplish the turnaround this year and are well on the way to do this if the overall environment does not worsen. In my opinion, the situation is still not stable.”

Maergner, who took over as Brazil chief at the start of the year, reportedly said VW would not repeat its errors in Brazil by guaranteeing jobs or over-investing in factories and models.

But he told Handelsblatt the new Fox model opened a new market for small cars below the Polo brand and said he would like VW in Brazil to keep developing entry-level cars for the global market.