Volkswagen Group first quarter operating profit fell to EUR4.2bn from EUR4.4bn following record unit sales which led to group sales revenue rising year on year from EUR 56.2bn to EUR 58.2bn.
The automaker said provisions "in connection with the diesel issue" were not booked in Q1 and less cash was spent on the various recalls and penalties.
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Group unit deliveries rose 7.4% to 2.7m with 1m in March alone, a record for any month.
"The first quarter results represent a good start for the new fiscal year," said finance chief Frank Witter.
"The annual press conference already addressed the topic that the new standardised vehicles test procedure WLTP will pose a great challenge for the entire automotive industry in the second half of the year.
"We are confident that we will reach our financial as well as strategic goals for this year."
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By GlobalDataSales revenue for the Volkswagen Passenger Cars brand rose 5.6% to EUR 20.1bn and operating profit "improved" to EUR 879m versus EUR869 a year ago due to higher volumes and lower product costs.
But VW noted: "Intense competition, exchange rate effects and advance payments for new products, particularly for the implementation of the electric offensive, among other things, weighed on performance."
Audi sales were worth EUR15.3bn versus EUR14.4bn and operating profit rose to EUR1.3bn from EUR1.2bn.
Skoda sales rose 4.9% to EUR 4.5bn and operating profit by 5.3% to EUR437m.
Seat sales rose 11.8% to EUR 2.8bn and operating profit climbed a massive 51.4% to EUR85m as "advance payments for new products and exchange rates were more than compensated by positive volume, price and mix effects".
Exchange rates and Continental GT production start-up costs hit Bentley. Sales fell from EUR361m to EUR351m and operating loss increased to EUR44m from EUR30m.
Positive volume, price and mix effects were unable to compensate for the effects of exchange rates and delays in the start-up of the new Continental GT.
Porsche also saw a sales rise, to EUR5.4bn from EUR5bn, and operating profit of Porsche Automotive improved to EUR939m from EUR932m.
Volkswagen Commercial Vehicles sales grew 2.4% to EUR 2.9bn and operating profit rose 9.1% to EUR224m.
At EUR 3.1bn, Scania brand sales revenue from January to March was as high as in the same period in 2017. Operating profit improved to EUR 331 (324) million due to volume and exchange rate effects, and the enhanced service business also had a positive effect.
MAN Commercial Vehicles operating profit declined to EUR83m from EUR93m as "competitive pressure and higher expenses, including for research and development, burdened the result, while higher volume had a positive impact".
Volkswagen Financial Services operating profit climbed 10.3% to EUR608m.
Outlook
The group expects this year's unit deliveries to moderately exceed 2017's.
"Challenges in the current fiscal year will arise mainly from the economic situation, increasing competition, exchange rate volatility and the diesel issue," the automaker said.
Sales revenue is expected to rise by as much as 5% year on year and an operating return on sales of between 6.5% and 7.5% is expected.
