VW sales dropped in October 2015 due to emissions scandal

Article by Andrew Christian, on November 16, 2015

Volkswagen brand posted a 5.3-percent year-on-year drop in global deliveries in October 2015 to just 490,000 vehicles. Likewise, the brand logged a 4.7-percent year-on-year drop in global deliveries in the first 10 months of 2015 to 4.84 million cars.

VW brand sales chief Juergen Stackmann, in a statement, attributed the descent to tense situations on world markets. Stackmann also attributed the decline to a slowdown in demand in Russia and Brazil. VW is currently reeling from the effects of allegations of emissions manipulation.

Additionally, the brand’s sales in China failed to grow as much as the auto industry. China accounts for nearly half of VW’s sales of cars and light trucks. On the other hand, the entire VW Group posted a 3.5-percent year-on-year drop in global deliveries in October to 831,300 vehicles.

The group also logged a 1.7-percent year-on-year dip in global deliveries in the first 10 months of 2015 to 8.26 million vehicles. Steve Man, a Hong Kong-based analyst for Bloomberg Intelligence, remarked that while VW managed to sell more than Toyota in the first half of 2015, the Japanese carmaker is expected to retain its crown as the largest automaker in the world in terms of vehicle sales.

The carmaker has already allocated EUR6.7 billion in the third quarter to cover costs of recalling around 11 million diesel cars fitted with fixed engines, although it has admitted that such an amount won’t be enough. VW has identified 800,000 cars which had incorrect carbon dioxide emission certifications.

This would prove costlier for the company since carbon dioxide emission ratings serve as the basis for taxation and compliance with emissions regulation in Europe. VW has pegged the economic risk of irregularities at EUR2 billion. VW brand chief Herbert Diess recently told German newswire DPA that while order intake in Germany is surging, it has been dropping in southern Europe, the United Kingdom and some markets overseas.

He remarked that there is no evidence that the carmaker conducted no further misconducts beyond the manipulations of diesel emissions tests and carbon dioxide certifications. He also told DPA that there is no possibility of job cuts for VW’s permanent employees.

Sources at VW, however, divulged that the carmaker is considering reducing the number of temporary workers to help mitigate the costs emanating from the scandal. VW works council chief Bernd Osterloh, meanwhile, said in the joint interview with Diess with DPA that bonus payments to workers would not be at the same level as last year.

He remarked that he has no idea how many people in VW were involved in the violations and manipulation of emissions tests. He, however, noted, that even if 100 workers were indeed involved, it represents a very small fraction since the VW has a global workforce of 600,000 people.

The German carmaker’s top management and labor representatives are currently in discussions to balance cost cuts and future investments while expecting billions of dollars in fines, lawsuits and vehicle repair costs.

United States law firm Jones Day is currently undertaking an independent probe at VW into the emissions test manipulation, with VW recently vowing to speed up a program that will urge workers to cooperate in the investigations.

The German carmaker has disclosed that it has put bond financing on hold because of the uncertainty of the ultimate cost of the emissions cheating scandal. It said it needs time to update the documentation required to sell bonds and other financing instruments to reflect possible fines and penalties.

Topics: vw, sales

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