Looks like the toxic emissions spluttering out of that 2007 Volkswagen Passat aren’t the only grey clouds forming over the German carmakers.
Volkswagen posted a quarterly loss this morning, their first in 15 years. The German heavyweights reported a huge operating loss of €3.48bn in the third quarter, compared to the €3.2bn profit they made a year earlier. The third quarter figures can thank the emissions scandal costs for most of that drop.
Although the numbers show VW’s earnings decreasing before the scandal was revealed, we know that dieselgate can’t have helped matters. In a market that is slowing down, a scandal of this magnitude would prove unmanageable for a smaller carmaker, but it does appear the sheer size and volume of VW will help it pull through.
New Volkswagen CEO Matthias Müller said the company will be “ruthless in punishing those involved” in the emissions scandal during a conference call this morning. He wouldn’t elaborate on the details but he has insisted those responsible will face the brutal consequences.
Despite the growing scandal, the company has announced that “the financial burden is enormous but manageable… we will emerge stronger and leaner than ever before.” Müller has also admitted that the €6.7bn (originally €6.5bn) put aside to cover costs is likely not enough, especially as it doesn’t factor in the potential lawsuits and regulatory fines. The quarterly report claims it cannot possibly estimate the amount of money the scandal will amount to, but some analysts predict it could rise to as much as six times the original amount put aside.
The company has said they will place quality above quantity going forward and profitability will come before sales volumes. Former CEO Martin Winterkorn set a goal to become the world’s largest-selling car manufacturer, which VW did succeed at in the first half of this year, knocking Toyota off the top spot. It does seem now that this plan may have inadvertently been the root cause of the emissions rigging. Toyota reclaimed the title just a few days ago, after VW’s sales began declining, even before the scandal emerged.
VW will also focus more on producing electric and hybrid vehicles, a smart move given the unease around diesel. It’s stopped the selling of any new vehicles that could have the defeat devices fitted and in some markets it has pulled future diesel models.
The questions that still haven’t been answered are from analysts, and VW car owners who are still wondering what is going to happen with their affected vehicles. Will compensation be offered? If Volkswagen wishes to regain trust and respect with the global public, they need to start answering the burning questions.