VW sales and profits jump despite emissions scandal
Cost of deception remains major burden on earnings thanks to legal problems
FRANKFURT, GERMANY— The Volkswagen diesel emissions scandal could prove to be little more than a speed bump as far as car sales for the company are concerned, at least according to figures released Thursday.
Sales and profit rebounded in the second quarter for the core Volkswagen brand, compared with a dismal first quarter.
With a combination of cost cutting and marketing, the German carmaker appears to have contained some of the damage to its image.
Although operating profit for the Volkswagen brand fell 12 per cent in the quarter to 808 million euros (about $1.2 billion) compared with the same period a year earlier, that was a drastic improvement over the first quarter, when the division barely broke even. Sales also improved.
Progress on cost cutting, if it continues, would be reassuring to Volkswagen investors, who have suffered a 25-per-cent drop in the share price since the company admitted in September that it had manipulated diesel vehicles to make pollution levels seem lower than they were.
Well before the deception, Volkswagen was making only a slim profit margin on cars with the Volkswagen brand because production costs were high compared with competitors like Toyota.
Most of the parent company’s profit has come from its Audi and Porsche luxury brands.
The cost of the scandal has still been a major burden on earni ngs. Net profit for the company as a whole fell by more than half to 1.2 billion in the second quarter. The decline was mostly the result of additional money that Volkswagen set aside to cover legal problems.
The carmaker said last week that it would subtract 2.2 billion from operating profit for legal issues.
With a combination of cost cutting and marketing, the carmaker appears to have contained some of the damage to its image
On Thursday, the company said that the sum included the cost of recalling cars equipped with defective Takata airbags, as well as fines from Volkswagen’s involvement in a scheme with other truck makers to fix prices.
“We produced a solid result in difficult conditions,” Frank Witter, Volkswagen’s chief financial officer, said in a statement. “But it will require continued hard work to absorb the significant impact from the diesel issue.”