Volkswagen’s share price rallied on Wednesday despite an operating loss of 3.48 billion euros ($3.84 billion) in the third quarter, as a scandal over falsifying its diesel emissions knocked the company.
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The U.S. Environmental Protection Agency disclosed on September 18 that a few Volkswagen diesel-powered cars contained software that allowed them to perform better on emissions tests in the lab than during road use.
After taking a large fee to cover the expense of its own discharges scandal Volkswagen has reported its first quarterly loss for at least 15 years.
The company set aside almost €7 billion ($7.75 billion) to address the continued situation, but officials now say that won’t be enough.
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.
Up to now, the expenses are mostly associated with the refitting of impacted automobiles, and company CEO Matthias Mueller has stated they are most likely to increase since the company is not still in a place to calculate its possible obligations from legal cases. “As a outcome, corresponding provisions have not been recognised in the interim financial statements”.
Chief Financial Officer Frank Witter said Wednesday the company had “solid and robust” cash resources to meet the financial impact of the emissions scandal.
The carmaker is bracing for total recall costs in coming quarters that analysts have estimated could range from 20 billion euros to as much as 78 billion euros.
“Allowing auto manufacturers to completely disregard vehicle standards for another five years is bad news for our environment and for consumer trust in European vehicle brands”, said Gerben-Jan Gerbrandy, a European Parliament member for the liberal ALDE group. “Together with the very strong net liquidity, this should reassure both equity and fixed income investors”.
Sales revenues in the first nine months of the year were up 8.5 percent, and the carmaker reaffirmed its full-year new vehicle deliveries of around 10.14 million.
It picked group veteran Winfried Vahland as its North American chief last month, before the emissions crisis erupted, as it pushed a policy to cede more power from its German headquarters to regional and auto brand divisions.
VW also makes Audi, Porsche, SEAT and Skoda cars along with luxury Bentley and Lamborghini vehicles.
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Meanwhile, throughout the USA, Volkswagen dealers are coping with the backlash of the scandal by offering steep discounts of more than $7,000 on a few of the company’s newer models including the 2015 Passat as well as 2015 and 2016 Jettas.
