Volkswagen profits hurt by ‘painful’ new anti-pollution rules and China downturn
Volkswagen profits dropped by 18.6 per cent in the third quarter as the German car manufacturer struggled with new emissions testing rules and slower vehicle sales.
The figures
The German carmaker's underlying profit for the third quarter was €3.5bn (£3.1bn), down from €4.3bn in the same period in 2017.
Vehicle sales also dropped 3.6 per cent as some of its models remained unavailable for sale.
Group sales revenue grew 0.9 per cent to €55.2bn in the third quarter, while for the first nine months it grew 2.7 per cent to €174.6bn compared with the same period in 2017.
Pre-tax profits also increased from €1.4bn to €3.5bn for the quarter on the previous year.
Why it's interesting
Chief financial officer Frank Witter said the EU's new WLTP testing procedure for CO2 emissions was “leaving its mark” on the company and would cost around €1bn over the full year.
He added that currency headwinds, a downturn in China, the realignment of the Nafta deal and uncertainty around Brexit had also been challenges.
The company also blamed the “diesel issue”; the Munich public prosecutor, issued an €800m fine to Volkwagen-owned Audi in October over emissions failings in V6 and V8 engines.
Volkswagen was also fined €1bn by public prosecutors in Braunschweig in June for its role in the diesel emissions scandal.
Witter said that after a tricky September and October he hoped the company would “step on the gas again” in November and December.
He said the changeover to WLTP had been “particularly painful” because many of its engineers were “tied up” with the diesel issue.
Rivals had stolen a march on the "costly" technology development, he said, but VW was in the process of closing the gap.
Volkswagen said it expected its sales to rise five per cent over the full year of 2018 and that deliveries to customers would exceed the 10.74m of last year.
What Volkswagen said
Chairman Herbert Deiss said:
The development in the first nine months of the current fiscal year is encouraging.
We are still facing major challenges, that we and the entire automotive sector have to overcome.
As we are currently in the midst of a groundbreaking transformation, we have to continue picking up the pace.