Volkswagen Passenger Cars’ operating profit plunged 86 per cent in the first quarter of 2016 (year-on-year) in the wake of the diesel emissions cheating scandal, though the wider VW Group posted far more robust figures.
Volkswagen Group’s core brand suffered a 1.3 per cent dip in worldwide deliveries to 1.46 million units (including unconsolidated Chinese joint-ventures), hitting subsequent revenue. Operating profit over Q1 fell to 73 million euros from 514 million euros in Q1 last year, while the operating margin was just 0.3 per cent.
But despite the big hit to the eponymous VW passenger brand, the overall Volkswagen Group (including subsidiary brands) actually grew its operating profit 3.4 per cent in Q1, with an operating return on sales of 6.8 per cent.
However, this growth in operating profit was made possible by the allocation of about 300 million euros in ‘positive special items’, including currency-related adjustments on the provisions VW set aside to cover costs related to the cheating scandal subbed ‘dieselgate’.
Additionally, group-wide sales dipped 1.2 per cent to about 2.58 million units, though deliveries increased marginally thanks to growth in Western Europe and Asia, as did its employee count, which grew 0.5 per cent to 613,000 people.
Volkswagen AG chairman Matthias Müller called the result satisfying, especially given what he rather dryly called the “diesel issue”.
“In light of the wide range of challenges we are currently facing, we are satisfied overall with the start we have made to what will undoubtedly be a demanding fiscal year 2016,” he said.
“…. we once again managed to limit the economic effects of the diesel issue and achieve respectable results under difficult conditions. This shows that, with its portfolio of strong brands and its good position in many global automotive markets, the Volkswagen Group sits on very robust foundations.”
Across the group, beyond Volkswagen Passenger cars, deliveries and profits (the latter excluding the Chinese joint-venture figures, accounted for separately) were mostly up, though Audi — the biggest contributor by far, accounting for 1.3 billion euros — fell marginally. Porsche was easily the second-biggest contributor to the operating result, adding 895 million euros.
For context, Audi’s operating profit was 18-times bigger than Volkswagen Passenger Cars' despite global volumes (now excluding Chinese joint-ventures again) being only one-third as big. Porsche AG’s operating profit was 12-times larger than VW Passenger, and its volumes were were but 1/18 the size.
Audi global deliveries grew 4 per cent to 455,754 units, while Skoda also grew by 4.3 per cent to 276,625. Volkswagen Commercials were up 4.3 per cent as well, to 113,136 units. Porsche was the real star, with volume growth of 9.5 per cent to 55,974.
As Bloomberg stated, VW hasn’t put the diesel crisis to bed yet. It allocated 16.2 billion euros last year to fix up to 11 million diesel cars worldwide and cover fines and lawsuits. Investigations continue, and the global recall to re-do the software in each car’s ECU will drag into 2017.
Volkswagen’s big focus through 2025 will be ramping up its electric vehicle strategy, with dedicated platforms and other large-scale investment. It will also move into alternate mobility solutions such as its big recent investment into ride-sharing app Gett.