VW profit up again from sales in Europe

The Star Early Edition - - INTERNATIONAL - David McHugh

VOLK­SWA­GEN’S prof­its rose in the first half of the year as the Ger­man car­maker ben­e­fited from in­creased sales in a grow­ing Euro­pean econ­omy and it moved past one-time costs for its diesel emis­sions scan­dal in the US.

Af­ter-tax profit rose to €6.6 bil­lion (R100.14bn) from €3.6bn in the same pe­riod in 2016, when the com­pany had more than €2bn in charges re­lated to its diesel trou­bles. Sales rev­enue rose 7.3 per­cent to €115.8bn.

Chief fi­nan­cial of­fi­cer Frank Wit­ter said yes­ter­day that the re­sults were boosted by in­creased sales “above all in Europe, and also in North and South Amer­ica, which is par­tic­u­larly en­cour­ag­ing”.

Wit­ter said that the strong earn­ings would po­si­tion the com­pany for the in­vest­ments it would need to make in the new tech­nolo­gies and busi­ness mod­els ex­pected to al­ter the in­dus­try in com­ing years.

In­vest­ing heav­ily

Car com­pa­nies are in­vest­ing heav­ily in de­vel­op­ing bat­tery-pow­ered and self-driv­ing cars as well as app-driven approaches to trans­porta­tion that in­volve or­der­ing rides us­ing a smart­phone but not nec­es­sar­ily own­ing a car.

The earn­ings per­for­mance over­came flat re­sults at VW’s lux­ury branch Audi, whereas the mass-mar­ket brand Skoda in­creased op­er­at­ing profit by 25 per­cent, helped by the new ver­sion of its Ko­diaq SUV.

The com­pany lost mar­ket share in West­ern Europe, to 21.6 per­cent from 22.1 per­cent, as sales growth fell short of the wider mar­ket’s ex­pan­sion. That was due both to a changeover to a new model of the VW Golf, which cost the com­pany sales of a high-vol­ume prod­uct, and “cus­tomer trust which has not been com­pletely re­gained as a con­se­quence of the diesel is­sue.” VW has agreed to more than $20 bil­lion (R260.28bn) in fines and civil set­tle­ments for equip­ping diesel-en­gine cars with il­le­gal soft­ware that en­abled cheat­ing on US emis­sions tests.

The soft­ware turned emis­sion con­trols on when cars were on test stands, and off dur­ing reg­u­lar driv­ing to im­prove mileage and per­for­mance.

The com­pany has apol­o­gised and says it is chang­ing its man­age­ment cul­ture to pre­vent fu­ture wrong­do­ing.

PHOTO: BLOOMBERG

Volk­swa­gen shares have dropped since re­ports last Fri­day that Daim­ler and VW in­formed author­i­ties last year of dis­cus­sions they had had since the 1990s that also in­cluded BMW.

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