Sales chief Axel Kalthoff said on VW’s results conference call there had been no significant impact on group sales from the scandal. In another shift, he also said that top executives at company headquarters in Wolfsburg, Germany, who had been criticized for micromanaging, would no longer get involved in details of product design.
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The operating loss, which compared to a €3.23 billion profit a year ago, was wider than the €3.27 billion deficit estimated on average by 11 analysts surveyed.
Recalling and repairing its offending diesel vehicles is going to cost VW billions of euros.
Volkswagen plans to cut investments by one billion euros a year at its core division, which accounts for five million cars to be recalled.
“The initial impact of the current situation is becoming clear”, said Volkswagen CEO Matthias Müller in a statement.
“Our customers’ confidence and trust is what is most important to us and we are doing everything what we can to win back this trust in our brand and in our great products”.
VW also makes Audi, Porsche, SEAT and Skoda cars along with luxury Bentley and Lamborghini vehicles. “Together with the very strong net liquidity, this should reassure both equity and fixed income investors”. Diesel fuel in China has been eschewed by consumers for being too dirty so the carmaker could have no regulatory issue due to its admitted cheating on diesel emissions tests in the US.
Excluding costs of the scandal, VW said it still expected the group operating margin to come in between 5.5 and 6.5 percent this year, after 6.3 percent in 2014.
The new testing rules, which will take effect for new vehicle models sold after September 1, 2017, will undergo “Real Driving Emissions” tests, meant to better reflect actual driving conditions. Revenues for the period were actually up 5.3% to €51.5bn, and VW has yet to revise its revenue forecasts down for the coming year.
Despite the scandal the company still expects sales to grow this year.
In addition to the 6.7 billion euros already set aside, “considerable financial charges may be incurred as legal risks crystallize”, the report warned.
The company is facing investigations in the US, Europe, and elsewhere, and a few of those investigations are likely to result in criminal charges against VW or a few of its employees.
Spain’s National Court said Wednesday it has opened a preliminary investigation into German carmaker Volkswagen for possible fraud over the pollution-cheating software installed in a few of its diesel engines.
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“We see it as a positive signal that management has pretty much kept the provision for the diesel scandal unchanged”, said Arndt Ellinghorst, automotive analyst at Evercore ISI.
