VW slumps to first quarterly loss in at least 15 years

Volkswagen today posted its first quarterly loss in at least 15 years, hit by costs related to its rigging of diesel emissions tests, and lowered its profit outlook.

The German group reported a third-quarter operating loss of €3.48 billion, in line with a €3.47 billion loss forecast in a Reuters poll of analysts.

VW set aside €6.7 billion in the July-September period to cover costs related to the manipulations affecting 11 million cars globally, up slightly from the €6.5 billion announced a week after the cheating became public on September 18.

As a result, the German group said it now expected its operating profit to drop “significantly below” last year’s record €12.7 billion.

Excluding costs of the scandal, the carmaker still expects its group operating margin to come in between 5.5-6.5% this year, after 6.3% in 2014.

Volkswagen plans to cut investments by €1 billion a year at its core division, which accounts for 5 million cars to be recalled. Luxury division Audi, source of about 40% of VW group profit, will also cut planned spending.

Volkswagen confirmed the loss it reported today was its first quarterly loss in at least 15 years but, due to accounting changes, was unable to say precisely when the last loss occurred.

VW may need to set aside more money for measures to stabilise sales if deliveries take a hit from the scandal, chief executive Matthias Mueller has said.

Steps could include discounts on new cars if owners turn in old models as well as cheap loans and incentives to dealers to buy back older cars.

Group deliveries, which also include premium brands Audi and Porsche, slid 1.5% in September to 885,300 cars and fell 3.4% in the third quarter to 2.39 million cars.

This causing VW to drop behind Japanese rival Toyota in nine-month global auto sales charts after clinching the top spot three months earlier.

However the German group stuck to its guidance for full-year deliveries to be on a par with last year’s record 10.14 million car sales.

Source: Reuters