At last, the scope of the Dieselgate scandal has become apparent with the release of Volkswagen’s financial picture for 2015. In real terms, the automaker took a 16.2 billion-euro ($18.2 billion) hammering to pay for the self-inflicted emissions cheating scandal. Its operating loss for 2015 was huge — $4.1 ($4.61 billion) — the first loss since 1993.
“the current crisis – as the figures presented today also reveal – is having a huge impact on Volkswagen’s financial position,” Matthias Mueller, VW chief executive, said in a statement. With the release of the financials, the “repercussions of the emissions issue are now quantifiable,” he continued.
The operating loss was reportedly calculated after deducting 16.2 billion euros to pay for Dieselgate costs, plus 400 million euros for restructuring cars and commercial vehicles. VW had already set aside 6.7 billion euros to cover specifically emissions scandal costs.
If it weren’t for Dieselgate and related expenses, Volkswagen would have had a strong year. For example, consolidated sales revenue was up by 5.4 percent to a total of 213 billion euros. The sales revenue jump was fueled by a strong performance by VW financial services and automotive business plus the effects of favorable exchange rates.
Looking to the future, VW predicted its deliveries 2016 will be flat. It also said there will be a drop in sales revenue of as much as five percent. VW calls it a “challenging environment” in which to operate. The automaker said its operating profit will be between five and six percent of sales, compared with 6.3 percent in 2014. Also, the automaker announced a massive dividend cut, 97 percent to 0.17 euros a preferred share. The news was greeted with a sell-off as VW’s stock traded down 5.6 percent in afternoon trading.
VW had been expected to release the results of an internal probe, examining the roles senior executive played in Dieselgate. The probe, under the guidance of Jones Day, a U.S. law firm, is well along and is slated to be over at the end of the fourth quarter, the automaker said. VW expects to release the final findings of the probe after it has reached a final deal with the U.S. Department of Justice. Justice is suing VW for $46 million in damages for violations of pollution laws, and it has launched a criminal probe of the automaker that is ongoing.
VW and the U.S. authorities took a giant step toward putting Dieselgate behind them with the agreement that the automaker would either fix or buy back 500,000 cars in the U.S. For the last six months, VW has been rocked, it seems, nearly daily by allegations in the self-inflicted scandal.
Last September, the automaker was charged by the Environmental Protection Agency (EPA), in a Notice of Violation, that it had cheated on emissions, using a “defeat device.” VW acknowledged that up to 11 million vehicles worldwide were involved the admitted cheating scandal that has become the automaker’s worst problem in its nearly 80-year history. Dieselgate, as it has come to be known, has wiped billions of euros off the automaker’s market value. The self-inflicted emission scandal also cost Martin Winterkorn, former VW chief executive, his job. And, VW’s global image has been severely damaged.
Automotive News reports provided information for this report.