VW profit up again from sales in Europe
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.
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.
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.