Volkswagen says cost of diesel emissions scandal has hit €30bn

German car maker sets aside further €1bn for legal costs to deal with fallout from dieselgate

Ben Chapman@b_c_chapman
Thursday 02 May 2019 09:59
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After-tax profit fell to €3bn from €3.3bn in the same quarter a year ago
After-tax profit fell to €3bn from €3.3bn in the same quarter a year ago

Volkswagen said the diesel emissions scandal has now cost the company €30bn (£25bn).

The German car maker’s chief financial officer revealed the figure on Thursday alongside a 10 per cent fall in quarterly profits.

The group set aside a further €1bn to cover legal costs associated with the scandal, which was first revealed in 2015.

VW admitted that it had cheated tests to make its vehicles appear less polluting than they were.

After-tax profit fell to €3bn from €3.3bn in the same quarter a year ago. Group revenues revenue rose 3.1 per cent to €60bn as sales volumes fell but profit margins rose.

Chief financial officer Frank Wittner said it was a “very strong first quarter” and “to an extent better actually better than we expected”.

“I think the key drivers were obviously the operational performance even though volume declined, but we were able to offset that with price and mix effects,” Mr Wittner told the Associated Press.

Mr Wittner said that earnings were under pressure from high outlays for the company’s future lineup of battery vehicles, but said that was “without alternatives”.

The company is pivoting to zero-local emissions vehicles to meet lower EU limits on greenhouse gas emissions. The company expects to begin production later this this year of the battery-powered ID hatchback at its plant in Zwickau in eastern Germany.

The Volkswagen brand, one of the company’s 12, saw operating profit rise 5 per cent to €921m as cost control and a more profitable model mix compensated for lower volumes.

Earnings fell however at two of the company’s chief money makers, its luxury Audi and Porsche divisions. Audi saw profits fall to €1.1bn from €1.3bn because of model changes and higher spending on new products and technologies. Porsche’s operating profit fell 12 per cent to €829m.

Additional reporting by agencies

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