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Emissions scandal pushes Volkswagen into first quarterly loss in 15 years

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Frankfurt : German auto giant Volkswagen booked day its first quarterly loss in 15 years in the wake of the global pollution-cheating scandal which also forced it to lower its full-year forecasts.

VW said provisions related to its admission that it fitted 11 million diesel vehicles worldwide with sophisticated software to skew emissions tests pushed it deeply into the red in the period from July to September.

The group also warned of further “considerable financial charges” related to legal proceedings over the scam, over which it is the subject of criminal probes in the United States and Germany.

Volkswagen, which has just been overtaken by Toyota as the world’s biggest carmaker in terms of sales, ran up a net loss of 1.673 billion euros ($1.85 billion) in the three-month period, compared with a profit of 2.971 billion euros a year earlier.

The losses were due to a charge of 6.7 billion euros VW took to cover the initial costs of the scandal, primarily a recall of all vehicles fitted with the software scheduled to begin in January 2016.

Excluding that provision, operating profit would have remained stable at 3.2 billion euros in the three-month period, VW said.

Third-quarter sales revenues, or turnover, advanced by 5.3% to 51.487 billion euros, while deliveries to customers fell by 3.4% to 2.392 million vehicles worldwide.

“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,” said Matthias Mueller, who was appointed chief executive shortly after the scandal broke to steer VW out of its biggest-ever crisis.

“We will do everything in our power to win back the trust we have lost,” vowed Mueller.

VW also makes Audi and Skoda cars along with luxury Bentley and Lamborghini vehicles.

“The Volkswagen group has very solid and robust liquidity resources. This will help us manage the challenging situation caused by the financial impact of the diesel issue,” added chief financial officer Frank Witter.

With regard to the full-year outlook, VW said that “because of the charges related” to the scandal, “we expect 2015 operating profit for both the group and the passenger cars division to be down significantly year-on-year.”

Nevertheless, VW expected deliveries to customers in 2015 “to be on a level with the previous year in a challenging market environment,” the report said.

And “depending on economic conditions, we expect 2015 sales revenue to increase by up to 4.0% above the prior-year figure,” it said.

In 2014, VW sold 10.217 million vehicles worldwide and booked operating profit of 12.697 billion euros on sales revenues of 202.5 billion euros.

PTI