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STORY: Volkswagen is warning that a period of cost-cutting is far from over.

The German auto giant said Thursday that second quarter pre-tax earnings came in at about $5.9 billion - down on this time last year.

Income was sapped by higher costs, and lower sales in China.

It also took a hit over expenses related to the possible closure of a plant in Belgium.

VW was already in the midst of a multi-billion dollar cost-cutting drive.

Now it says that effort will run beyond the second half of this year.

The company is also revamping its product lineup.

It wants to defend its market share in China, where it faces growing competition from local rivals.

There was a similar story Thursday from German peer BMW.

It reported a lower-than-expected profit margin, with weak demand in China among the negatives.

Shares in the firm sank close to 4% in early European trade Thursday following the numbers.

Volkswagen was down around 2%.