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VW Group records Q1 profit

Ups and downs: Sales of Volkswagen-branded vehicles in the United States fell by 5.7 per cent compared with quarter one, 2015.

Diesel emissions scandal takes a hit but VW Group bounces back in first quarter

Volkswagen logo1 Jun 2016

By TIM NICHOLSON

VOLKSWAGEN Group has recorded a 3.4 per cent increase in operating profits to €3.4 billion ($A5.2b) for the first quarter of the year despite a drop in vehicle sales in key markets such as the United States.

The results follow the diesel emissions scandal that has plagued the German auto-maker since September last year when it was revealed it had installed an emissions cheat device on about 11 million diesel-powered vehicles worldwide.

Sales revenue dropped by 3.4 per cent compared with the first three months of 2015, with VW Group recording €51 billion ($78.4b) this year, while pre-tax profits dropped by 19.3 per cent from €3.97 billion ($A6.1b) to €3.2 billion ($A4.9b).

The slide in sales revenue was put down to a slowing of vehicle sales as well as the effects of negative exchange rates.

Globally, VW Group sold 2.3 million vehicles in the first quarter, representing a 0.6 per cent lift over Q1, 2015, despite the ongoing emissions crisis.

Sales of Volkswagen Passenger Cars dipped by 1.3 per cent to 1,459,522, while the operating profit for the VW brand took a massive hit, dropping from €514 million (A$790m) in the first three months of last year to €73 million ($A112m) in Q1 this year.

VW Group sales rose in Europe and Asia Pacific by 1.5 and 4.4 per cent respectively, but North American registrations dropped by 2.2 per cent and South American sales tanked, down 30 per cent over Q1, 2015.

Within North America, sales in the United States, where the diesel emissions scandal was uncovered, dipped by 5.7 per cent and registrations in Canada fell by 10.6 per cent.

VW Group's Chinese joint-ventures recorded an operating profit of €1.2 billion ($A1.8b), a 27 per cent decrease over the previous year.

Globally, Audi continued its upward trajectory, with sales up by 4.0 per cent, Skoda lifted by 4.3 per cent, while Lamborghini and Porsche grew by 5.0 and 9.5 per cent respectively.

The only other brand to drop apart from Volkswagen was Bentley which slid by 30.4 per cent from 2232 units to 1554.

Volkswagen AG chairman Matthias Mueller said he was happy with the results given the challenging conditions resulting from the diesel scandal.

“In light of the wide range of challenges we are currently facing, we are satisfied overall with the start we have made to what will undoubtedly be a demanding fiscal year 2016,” he said. “In the first quarter, we once again managed to limit the economic effects of the diesel issue and achieve respectable results under difficult conditions.

“This shows that, with its portfolio of strong brands and its good position in many global automotive markets, the Volkswagen Group sits on very robust foundations. We can build on these when we now work towards modernising our Group and positioning it for the new world of mobility.”

VW Group says in a statement that, depending on economic conditions, exchange rates and the fallout of the diesel emissions crisis, it expects sales revenue to be down by five per cent for the full year 2016 compared with last year and added that it anticipates a “marked decrease” in sales revenue.

“2016 will be a transitional year for Volkswagen that will see us fundamentally realign the Group. Nevertheless, we remain confident that our operating business will again record solid growth this year. The Group's robust financial strength and earnings power are key to our ability to take the necessary decisions calmly and diligently, and to resolve the strategic policies that will shape our future with the necessary determination,” according to Mr Mueller.

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