Due to recall costs, Audi is not where they would have wanted to be in terms of profitability.
The dishonesty of the VW Group is affecting Audi’s third-quarter profit margin, due to the high costs determined by recalls for those “problematic” diesel engines. Therefore, their operating profit diminished by 8 percent of sales from a 9,2 percent in the second quarter. In comparison, Mercedes had a 10,5 percent profit margin in the third quarter. The emission scandal is growing considerably as recent revelations revealed that the VW’s 3,0 V6 diesel engine is also susceptible for software tricks. It only means lower profits in the future.
More than that, the Ingolstadt carmaker margins will further reduce by investments in new models and technologies to keep up the pace with Daimler’s Mercedes and to compete with BMW as the biggest luxury-car maker in the world. “We are continuing along our growth path”, Audi AG Chief Executive Officer Rupert Stadler said in a statement. “We are increasing our deliveries, expanding our international production network, safeguarding jobs and actually continuing to recruit more employees”. Next year, Audi will start selling a new version of its best-selling model, the A4 sedan and station wagon, and open a factory in Mexico. VW’s main profit source is Audi and the Group will need all the extra cash to pay those fines, recalls and lawsuits that will follow. The company allocated 6,7 billion euros in the third quarter for all anticipated costs linked to the scandal and on this background VW had their first quarterly deficit in 15 years.
By Sorin Petcu