Marred by the massive dieselgate scandal, Volkswagen Ag, Europe’s largest automaker and the second biggest in the world, saw its third quarter profit decline for the first time in 15 years.
The first loss in more than a decade and a half was actually met positive by the company’s investors, with the shares rallying after the news as the stakeholders prepared for a far worse case scenario. VW said it had posted a loss of 3.48 billion euros ($3.84 billion) compared to a gain of 3.23 billion euro ($3.57 billion) during the same timeframe last year. The dieselgate cost provisions were of 6.7 billion euros ($7.4 billion), a little over the initial prediction of 6.5 billion euros. “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,” commented in a statement the company’s new chief executive officer Matthias Mueller. The group added its full year operating profit would be “significantly below” the figure turned last year as the costs related to the scandal will mount. VW last month announced it had purposely cheated on diesel emissions tests in the US and total of up to 11 million autos were sold around the world equipped with the illegal software.
Even analysts and advisors pointed out to the better than expected performance, with Evercore ISI saying the group’s operating performance EBIT (earnings before interest and tax) was “clean” and the company’s overall better than estimated profit of 6.2 percent. The VW brand margin was also praised – at three percent, while luxury subsidiary Audi was more disappointing with just 8 percent.