Emissions scandal sends profits at VW into reverse

VOLKSWAGEN has suffered a sharp fall in profits as the emissions scandal engulfing the German car maker took its toll.

Drivers shunned VW’s Golfs and Polos but chief executive Matthias Mueller insisted he was satisfied with the start of what he described as a demanding 2016.

The disappointing update came as rival Jaguar Land Rover blamed a slowdown in demand from China, and an explosion that destroyed thousands of cars, for wiping £1bn off annual profit.

JLR shouldered a £157m oneoff charge following the blast at a chemical plant in Tianjin, China last year.

The firm, which is owned by Indian conglomerate Tata, said profit fell to £1.6bn for the year to March, down from £2.6bn.

Figures were little better at Volkswagen where profit fell 20pc to £ 2.4bn for the last three months, down from £2.7bn in the same period last year.

Sales fell 3.4pc to £39bn dragged down by VW-branded cars where sales slumped 83pc to £56m from £394m. They also own Audi and Porsche. Volkswagen has admitted that 11m of its cars were fit- ted with so-called ‘defeat device’ software designed to trick official tests into believing a car is emitting fewer pollutants than it really is.

The ‘defeat device’ software is able to detect when an emissions test is ongoing, and adapt the engine to make it run according to US standards.

Immediately after testing is finished, it is claimed the software switches into standard drive mode in which poisonous nitrogen oxide emissions rise to up to nine times allowed levels. Despite this the firm has already told staff they would be handed a ‘wellearned’ bonus for that year.

Mueller said yesterday VW has the financial resources to weather the scandal.

He said: ‘In light of the wide range of challenges we are currently facing, we are satisfied overall with the start we have made to what will undoubtedly be a demanding fiscal year 2016.

‘In the first quarter, we once again managed to limit the economic effects of the diesel issue and achieve respectable results under difficult conditions.’