CHATTANOOGA, TN (Times Free Press) -- Volkswagen AG today reported that net profit fell 35% in the first quarter to $2.66 billion as operating earnings dropped at its VW brand and Audi business in the quarter.

"The current environment is definitely a tough challenge for the entire industry," said Martin Winterkorn, the company's chief executive.

At the same time, the VW Group's share of the global passenger car market rose year-on-year basis to 12.6 percent, the company reported.

Worldwide unit sales by the Volkswagen Group rose by 5.1 percent year-on-year in the first quarter to 2.4 million vehicles.