Volkswagen boss Matthias Müller has vowed to be “ruthless in punishing those involved” in the emissions-rigging scandal, which pushed the German carmaker €3.5bn into the red, its first quarterly loss in 15 years.
Speaking before a trip to China with the German chancellor, Angela Merkel, Müller apologised to shareholders and customers for the scandal.
“We are leaving no stone unturned to find out what exactly happened and to make sure nothing like this ever happens again,” he told analysts and investors. Volkswagen has hired professional services firm Deloitte to help with the investigation.
At the Tokyo motor show, Herbert Diess, who runs the Volkswagen brand, and Sven Stein, the head of VW’s Japanese division, also apologised for the scandal. Stein stood on stage and bowed for several seconds in a Japanese style apology.
Setting out a five-point plan, Müller said that while Volkswagen’s drive for perfection would continue, the company’s mindset and culture would change. He promised a major reorganisation including decentralisation and faster decision making.
A new strategy, named 2025, will be announced next summer. The carmaker wants to concentrate on quality not quantity, he said. It also plans to cut back its portfolio of more than 300 models and offer more electric cars.
Müller’s remarks came as Volkswagen posted an operating loss of €3.48bn in the third quarter against a profit of €3.2bn a year earlier. The loss was broadly in line with analysts’ forecasts. The company expects 2015 operating profits to be down significantly on last year’s €12.7bn as a result of the emissions fallout.
The company took a €6.7bn charge to cover the cost of recalling 11m vehicles which contain software to cheat emission tests, up from the €6.5bn it had previously set aside. Müller was unable quantify potential penalties and litigation costs.
Analysts estimate that Volkswagen’s final bill could climb to €78bn as it faces regulatory fines and class-action lawsuits around the world. The company has increased cost cutting efforts and can cover part of the cost from its cash reserves. VW’s chief financial officer, Frank Witter, said the financial fallout was “enormous but manageable”. There are no plans to cut the dividend.
Volkswagen shares shrugged off the news and rose more than 4% during trading, making the firm the biggest riser on the German stock market.
Nearly six weeks after Volkswagen admitted it cheated emissions tests in the US, Müller pledged: “We will do everything in our power to win back the trust we have lost.”
But Bozena Michalowska Howells, from UK law firm Leigh Day, who is investigating compensation claims on behalf of 6,500 British drivers, was not convinced. She said: “Volkswagen customers still do not know what is going to happen to their vehicles. If Mr Müller wishes to restore trust he could start the process of setting up a compensation scheme.”
Moody’s credit rating agency said it was reviewing the results as part of its assessment of Volkswagen’s credit quality, adding that the emissions crisis had “become an important consideration for the Volkswagen rating”. Weaker prices for secondhand diesel cars pose additional risk.
Group sales rose by 8.5% to €160bn in the third quarter. Volkswagen warned that deliveries to customers would be flat this year – on a par with last year’s record €10.14m sales. However, sales chief Axel Kalthoff insisted that orders for diesel vehicles had not been affected by the scandal.
Volkswagen’s Porsche brand cut its full-year profit forecast by about €2bn as a result of the emissions scandal. It expects to post a 2015 profit after tax of €800m-1.8bn.
Sebastiaan Van Doorn, assistant professor of enterprise at Warwick Business School, said: “While VW has reported a loss, underlying sales numbers are robust. It is likely that VW, one of the largest employers in Germany, will survive this scandal … The losses associated with this scandal will be spread out over many years.
“The greater worry is that VW does not seem eager to change much about its corporate policy, or change its hierarchical makeup and centralised decision-making strategies that break up the interface between the top management team and middle managers.”
On Monday, VW lost the coveted top spot for global car sales to Japanese rival Toyota, a few months after it achieved its longstanding ambition of becoming the world’s bestselling car manufacturer. VW sales fell in China, the company’s biggest export market, for the first time in a decade.
This article was written by Julia Kollewe, for theguardian.com on Wednesday 28th October 2015 14.30 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010
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