Problems with the existing methodology for measuring harmful nitrogen oxide emissions have come into focus following revelations that Volkswagen installed defeat devices in a few 11 million diesel cars in the USA and Europe that allowed the company to cheat in emission tests.
Advertisement
The crisis has already wiped out more than a fourth of Volkswagen’s market value as its stock price fell.
The reason is the 6.7 billion euros set aside to deal with the aftermath of the diesel emissions tests scandal, which broke towards the end of the July to September period.
While Mueller has routinely thanked Winterkorn for his contributions to Volkswagen’s growth, the new CEO has been keen to set himself apart from the style of his predecessor, who was notorious for berating employees for perceived shortcomings and keeping managers on a short leash. The appearances are crucial as Volkswagen braces for costs that analysts have estimated could total from $22.1 billion to as much as $86 billion. The scandal has cost Volkswagen the position as the biggest automaker in the world by sales, which Toyota has regained.
However the German group stuck to its guidance for full-year deliveries to be on a par with last year’s record 10.14 million vehicle sales. On top of the costs of likely fines, recalls, and full-blown auto buybacks in other countries, a few analysts think the ultimate cost of the scandal might push €80 billion.
As a result of that massive exceptional charge, VW’s posted a pre-tax loss of €2.52bn, although the market did not seem too choked up by the news, as the shares as the shares advanced 1.6% to €123.70. The sale of a 3 billion euro stake in Suzuki pushed the company’s measure of third-quarter free cashflow to 7 billion euros, nearly three times the previous year’s level.
“Together with the very strong net liquidity, this should reassure both equity and fixed income investors”. And “depending on economic conditions, we expect 2015 sales revenue to increase by up to 4.0% above the prior-year figure”.
Still, it remains to be seen how consumers will view VW after the scandal and whether the carmaker will have to lower prices to sell its vehicles. The commission had wanted to ban from sale in the European Union new vehicle models that exceed the legal limit of 80 milligrams per kilometer by more than 60% from September 2017 onward and drop that to 20% two years after.
The quarterly report released Wednesday morning is not a surprise as Volkswagen was expected to take losses.
Advertisement
At the Tokyo auto show, Herbert Diess, head of the namesake Volkswagen brand, apologized for the emissions cheating scandal and said VW will delay the launch of a diesel vehicle in Japan.
