Diesel scandal puts brake on VW Q1 results

First quarter pre-tax profits at German car maker Volkswagen slumped almost 20% to €3.2bn as diesel emissions scandal continued to take its toll.

Revenue fell to €50.9bn from €52.7bn. Chief executive Matthias Müller said he was “satisfied overall with the start we have made to a challenging year and have achieved respectable results under difficult conditions”.

Volkswagen last year admitted that it installed software in its diesel cars to cheat US emissions tests and has already made provisions of more than €16bn to cover costs relating to the scandal.

Operating profits at the Volkswagen-branded car unit plummeted to €73m from €514m a year ago, with a year-on-year decline in volumes and sales revenue.

“In the first quarter, 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,” he said.

He said Volkswagen was reiterating its forecast for 2016 as a whole.

“Depending on economic conditions – particularly in South America and Russia – and exchange rate developments as well as against the backdrop of the diesel issue, the board of management expects 2016 sales revenue for the Volkswagen Group to be down by up to 5% percent on the prior-year figure.”

The company added that it anticipated an operating return on sales of between 5-6% in 2016, but warned that it expected a “marked decrease” of 5.5-6.5% in passenger cars sales revenue.