Volkswagen on Wednesday posted its first quarterly loss in at least 15 years, in a first sign that the German car giant is paying dearly for cheating on emissions tests.
The scandal resulted in a 3.5-billion-euro ($3.9-billion) operating loss in the months from July through September, when news of the pollution scheme broke. The embattled carmaker said it booked a net loss of nearly 1.7 billion euros, down from a profit of nearly 3 billion euros a year earlier.
Despite the bleeding, investors had expected worse after VW had earlier announced it had set aside 6.7 billion euros for recalls and fines. The relatively modest loss, coupled with sales revenue rising 5.3 percent to 51.5 billion euros, sent shares up 4 percent in early trading.
Tip of the iceberg
However, Wednesday's results may just be the tip of the iceberg for VW, as the quarterly results only include the impact of the initial weeks of the scandal. The group's new CEO, Matthias Müller, appeared to admit as much in his reaction to the earnings report.
"The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear. We will do everything in our power to win back the trust we have lost," the chairman said in Wolfsburg, home of the German auto maker.
The financial fallout figures come as Volkswagen is struggling to repair the damage done to its image among customers, dealers and shareholders. "We will do everything in our power to win back the trust we have lost," Müller stressed in the statement.
In the four weeks since the emissions scandal broke, the Group has announced several steps to do just that. Chief among them was cleaning out the top management, most notably replacing disgraced CEO Martin Winterkorn with former Porsche chief Matthias Müller. Earlier this month, the company went one step further, announcing it was recalling the 8.5 million diesel vehicles equipped with the cheating software across Europe - the biggest such move in the continent's history.
However, VW is feeling the aftershock far beyond Europe's borders. In the US, where environmental authorities exposed the company's wrongdoings, Volkswagen is facing a slew of lawsuits. The federal Environmental Protection Agency (EPA) in Washington has warned that the carmaker could face penalties of some $18 billion if the allegations prove true.
Dozens of other countries, from South Africa to China, have launched investigations as well. In Japan, where Volkswagen sells some 60,000 vehicles a year, the auto maker has now put off launching a diesel model until after next summer.
Still, several top executives seized the opportunity on Wednesday to publicly atone for the company's sins at the Tokyo Motor Show.
"On behalf of my entire company, I'd like to apologize," said Herbert Diess, the newly appointed chief of VW's namesake brand. "We did some things that were wrong," he admitted, but added: "We are doing everything we can to bring back this trust in our brand."
"We will uncover and disclose the full truth of what happened. We will make sure that something like this never happens again," he assured the audience, while promising to "create a new and even better Volkswagen."
Diess then joined the head of VW's Japan division, Sven Stein, in unveiling a new plug-in hybrid sport utility vehicle.
Whether - and when - consumers are willing to forgive Volkswagen remains to be seen. Things could get worse, before they get better, as authorities around the globe wrap up their investigations. For many, especially in the US, operating losses of $3.5 are unlikely to be enough. They want to taste blood.
On Volkswagen's home turf, however, Germans have proven much more forgiving of the iconic company. A national survey taking the temperature on German consumer confidence, which was published on Wednesday, revealed that just 8 percent of those polled expected serious fallout from the scandal.
Nonetheless, the auto titan, which was overtaken by Toyota as the world's top-selling carmaker this week, is now warning shareholders to lower their expectations. Commenting on its bleak third-quarter report, the group said it expected operating profit to drop "significantly below" last year's 12.7 billion euros.
pad/hg (AP, AFP, dpa, Reuters)