Volkswagen Financial Services (VWFS) reported a 5.6% year-on-year increase in H1 profits to €1.2bn (£1bn), which it attributed to strong deliveries for passenger cars and a low interest rate environment in Europe.

The number of new contracts was up by 300,000 to 3.9m. Revenues were up 4.1% to €16.6bn. Leasing income from passenger cars was down 3% to €396m, but was offset by higher revenues in the commercial vehicles segment and other financial services.

Volkswagen, which last month revealed plans for car-sharing in Germany and abroad to compete with the likes of BMW and Daimler, said it was “well prepared for the future challenges in the mobility business and the mixed developments in regional automotive markets”.

It highlighted a digitalisation drive within VWFS, which it linked to the captive’s investment in VTXRM, a Portuguese contract management company, in April.

“We believe that automotive financial services will continue to be very important for vehicles sale worldwide in 2018,” Volkswagen said.

Volkswagen group results feel dieselgate impact

At group level, Volkswagen reported a fall in profits of 9.1% to €8.1bn, despite higher revenues of €119bn, up 3.4%.

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An increase in income in all segments, with VW passenger car profits up by €340m, was offset by a €1bn dieselgate fine and another €635m in costs over the emission cheating scandal.

The group has been navigating a turbulent year, with its operations probed by prosecutors in Germany, the United States and elsewhere. In June, Audi boss Rupert Stadler was arrested in Germany, with prosecutors citing risks of evidence tampering and flight.

The carmaker’s position in its home market was further complicated when Germany’s Federal Court of Justice gave the green light for local authorities to impose city-wide bans on diesels. In the aftermath of the decision, Volkswagen launched a “diesel ban guarantee” for buyers of new vehicles, in an effort to safeguard passenger car sales.