(Reuters) -Volkswagen's truck unit Traton on Monday reported a 3% rise in nine-month revenue amid subdued demand for commercial vehicles.

Shares in Traton fell 1.3% by 1050 GMT.

Sales stood at 35.3 billion euros ($38.10 billion) by the end of September, while profitability rose at its key Scania unit with a 14.4% return on sales versus 12.8% last year.

The truckmaker last week released third-quarter operating profit and reported a return on sales above expectations, driven by robust sales in its U.S. brand International and Swedish unit Scania.

"Well aware that the final quarter will be challenging, we are still targeting the upper end of the adjusted return on sales outlook range of 8 to 9%," finance chief Michael Jackstein said in a statement.

The company's margin peaked in the third quarter and that would unlikely be repeated in the fourth quarter, he said during a post-earnings call.

Swedish peer AB Volvo's earnings fell more than expected in July-September as the post-pandemic slowdown in demand hit truckmakers.

NORTHVOLT BATTERY WOES

The share of zero-emission vehicles (ZEV) at Scania almost halved to just 44 electric trucks delivered in the quarter.

Northvolt, Scania's main battery supplier, of which VW owns about a fifth, in the past months shrunk operations and cut jobs amid production problems, waning demand for electric autos, and competition from China.

Traton CEO Christian Levin reiterated support for the supplier and said that Northvolt deliveries are now going according to the adjusted plan and he is satisfied with this level in the current market environment.

But "not all Scania trucks this year delivered with only Northvolt batteries," Levin said, adding that some of the short-distance electric trucks came with batteries from an Asian supplier.

In 2024, Scania's purchases with Northvolt only amounted to smaller volumes, the Swedish truckmaker said in the quarterly report.

($1 = 0.9264 euros)

(Reporting by Andrey Sychev and Alexander Huebner, Editing by Rachel More, Miranda Murray and Sharon Singleton)