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By Bloomberg

Volkswagen AG’s namesake brand reported thinner margins on cars like the Passat sedan last year as the German automaker’s efforts to lift profitability at its biggest division failed to halt a slide in earnings.

Operating profit at the VW passenger car unit fell 14 percent to 2.48 billion euros ($2.64 billion) in 2014, even as sales edged up 0.4 percent to 99.8 billion euros, the Wolfsburg- based company said Thursday. As a result, the margin narrowed to 2.5 percent from 2.9 percent.

“We want to get better in every respect in 2015 and take the next step towards the top,” Chief Executive Officer Martin Winterkorn said Thursday in a speech prepared for a press conference in Berlin.

Volkswagen set a target last year of lifting profit at its best-selling brand by at least 5 billion euros by 2017 through reduced spending and higher productivity. The goal is for the VW nameplate to generate margins of at least 6 percent by 2018, as the world’s second-largest carmaker seeks to reduce its reliance on its Audi and Porsche luxury divisions for profit.

VW said today that more than 1 billion euros in efficiency gains will lift earnings at its namesake brand this year.

After years of pushing for growth in its bid to surpass Toyota Motor Corp., Volkswagen has shifted focus to profitability, even as it boosts investment to upgrade factories and develop technology for electric cars and self-driving vehicles.

Audi Profit

Those efficiency efforts have yet to pay off as Volkswagen faces slowing growth in China and plunging demand in Russia and Brazil. The manufacturer is targeting group operating profit in a range of 5.5 percent to 6.5 percent of revenue, compared with 6.3 percent in 2014. The automaker’s truck operations are also weighing on profitability.

The potential decline in profit comes with earnings power at Audi slipping. As the world’s second-largest maker of premium cars increases spending on additional manufacturing capacity and new models to catch BMW, its profit margin narrowed to 9.6 percent last year from 10.1 percent. The return on sales this year will be in a range of 8 percent to 10 percent, Audi said Tuesday.

Porsche’s profit margin, meanwhile, narrowed to 15.8 percent from 18 percent after the sports-car maker rolled out the Macan compact sport-utility vehicle.

Volkswagen’s profit from its operations in China jumped 21 percent to 5.18 billion euros. Deliveries in the world’s largest car market rose 12 percent to 3.68 million vehicles.

The automaker, which sold a record 10.1 million vehicles last year, expects to “moderately” increase deliveries in 2015, backed by 50 new or revamped models including the VW Touran compact van, Skoda Superb sedan and Audi Q7 SUV.