Market News & Analysis
VW emissions scandal leads to first quarterly loss in 15 years
City Index October 29, 2015 9:36 AM
German car manufacturer Volkswagen has reported its first quarterly loss for at least 15 years.
The news comes following the emissions scandal, in which the company's cars were found to have been fit with devices to deceive emissions tests. Some 11 million diesel cars were affected globally and Volkswagen has set aside €6.7 billion (£4.8 billion) to cover the scandal. That has left the firm with a €2.52 billion pre-tax loss for the third quarter of the year.
Despite the emissions scandal, Volkswagen says it expects to see a growth in sales for the year – but profits are predicted to be "down significantly", the company warned.
For the three months to the end of September, the company reports that vehicle sales fell 3.7 per cent and production fell 11.6 per cent compared to the same period in 2014. However, Volkswagen says it's still expecting an overall rise of up to four per cent for the year.
Chief financial officer Frank Witter said that the €6.7 billion was likely to be the first of many costs that the company must deal with in regards to the scandal – since no penalties, fines or compensation to customers have been included in that figure.
"The financial burden is enormous but manageable [...] but we will emerge stronger and leaner than ever before," he said.
Volkswagen believes that the emissions scandal will have a limited effect and, although sales were down recently, the company doesn't expect that to last for the long-term.
Axel Kalthoff, director of group sales explained: "We do not see that the diesel issue is impacting our sales and order intakes for diesel."
He added: "There might be one or another country or one or another brand, especially in western Europe, that might be affected for the time being on the diesel issue, but at a group level we are fine on order intake."
Shares in Volkswagen have fallen around a quarter since September – they also rose around 3.2 per cent after the Q3 results were published on Wednesday (October 28th).
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