VOLKSWAGEN AG, Europe's largest carmaker, said that profits during the first six months of 1996 outstripped its sales growth but noted a weak German car market was hampering profitability.

The Wolfsburg-based group said income from ordinary activities, the main benchmark used by industry analysts to evaluate the company, rose 45 per cent to 891 million marks from 616 million marks in the 1995 period.

But VW, which said it faced overall difficult operating conditions during the period, said group sales grew only 13.6 per cent, rising to 50.5 billion marks.

The car maker, which has staged a recovery since a record loss in 1993, said industry overcapacity, growing competition and weak cyclical demand as well as currency market turmoil weighed on the group but profits would rise for 1996.