Volkswagen posts first losing quarter in 15 years over losses from scandal

Costs related to test rigging scandal see carmaker report a €3.48 billion loss

PUBLISHED : Thursday, 29 October, 2015, 12:24am
UPDATED : Thursday, 29 October, 2015, 12:24am

Volkswagen posted its first quarterly loss in at least 15 years on Wednesday, slammed by costs related to its rigging of diesel-emissions tests, and lowered its profit outlook.

The German group reported a third-quarter operating loss of €3.48 billion, in line with a €3.47 billion loss that was forecast in a Reuters poll of analysts.

VW set aside €6.7 billion in the July-September period to cover costs related to the manipulations affecting 11 million cars globally, up slightly from the €6.5 billion announced a week after the cheating became public on September 18.

As a result, the German group said that it now expected its operating profit to drop "significantly below" last year's record of €12.7 billion.

Excluding costs of the scandal, the carmaker still expects its group operating margin to come in at between 5.5 per cent and 6.5 per cent this year, after 6.3 per cent in 2014.

Volkswagen plans to cut investments by €1 billion a year at its core division, which accounts for 5 million cars to be recalled. Luxury division Audi, source of about 40 per cent of VW group profit, will also cut planned spending.

Volkswagen confirmed that the loss it reported was its first quarterly loss in at least 15 years, but due to accounting changes, the group was unable to say precisely when the last loss occurred.

VW might need to set aside more money for measures to stabilise sales if deliveries took a hit from the scandal, chief executive Matthias Mueller has said.

Steps could include discounts on new cars if owners turn in old models as well as cheap loans and incentives to dealers to buy back older cars.

Volkswagen deliveries, which also include premium brands Audi and Porsche, slid by 1.5 per cent in September to 885,300 cars and fell 3.4 per cent in the third quarter to 2.39 million cars.

The losses caused VW to drop behind Japanese rival Toyota in nine-month global vehicle-sales charts, after clinching the top spot three months earlier.