28th October 2015
Volkswagen has posted a loss in its first set of accounts since news of the emissions scandal broke.
The company had to set aside €6.7bn (£4.8bn) to deal with the crisis. For the third quarter, it posted a €3.48bn operating loss and a €2.52bn pre-tax loss.
Shares rose by around 3% in early trading, as investors may have been reassured that the company’s position was not worse and because profits rose by 8% if you ignore the vast cost of the scandal.
VW has been rocked by revelations that it used software to cheat in diesel emissions tests in 11 million cars.
Matthias Müller, chief executive, says: “The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear. We will do everything in our power to win back the trust we have lost.”
The company warned that its full-year results would be likely to be “down significantly” due to the impact of the scandal, but that sales revenues are expected to rise by 4% Volkswagen today posted its first quarterly loss in more than 15 years as the cost of the emissions scandal hit home.
Laith Khalaf, senior analyst, Hargreaves Lansdown, says: “It’s a long road back for Volkswagen to regain public trust. The billions of euros put aside to cover the cost of the emissions scandal is likely to be the tip of the iceberg for the car manufacturer.
“The company not only faces the cost of fixing the affected cars, but also fines from various countries, compensation claims, possible law suits from customers and shareholders, and the chance of criminal prosecution, not to mention the reputational damage done to the brand.
“Volkswagen is facing a big black hole that it’s going to have to throw money at for the foreseeable future, and at the moment it has no idea how deep that hole is.
“BP is still paying for the Gulf of Mexico oil disaster five years after it happened, to the tune of $11 billion so far in 2015. Likewise PPI has cost Lloyds £1.9 billion so far this year, more than a decade after the mis-selling scandal made the headlines. The lesson for Volkswagen is that it takes an awfully long time to clear the air.”