Volkswagen To Post First Quarterly Loss in 15 Years

by Aaron Cole

Updated: December 30th, 2020 Published: October 27th, 2015

volkswagen to post first quarterly loss in 15 years

Volkswagen will post Wednesday its first quarterly loss in 15 years after the automaker was rocked this summer with a scandal that affected 11 million vehicles and cost the company tens of billions of dollars in lost value already.

Bloomberg (via Automotive News) reported that 10 analysts estimated that the company would post a $3.6 billion loss for the quarter ending Sept. 30.

Although the company said it reserved more than $7 billion to help pay for the scandal, many agree that the loss will be far greater — from $16 billion to $86 billion.

New Volkswagen CEO Matthias Müller will address investors for the first time during the earnings call. At stake is the company’s future profitability and appearance for the beleaguered automaker who has yet to define specifically how it will fix its cars worldwide.

“We understand that VW is in a very tricky spot,” Arndt Ellinghorst, a London-based analyst with Evercore ISI, told Bloomberg. “Nevertheless, the company should be far more proactive and release more factual details concerning its recalls.”

In 2013, Volkswagen spent more on research and development than any other company — in any sector. This month, Müller said that the company would shed non-essential projects from its budget to keep the company afloat during the crisis.

According to Bloomberg, the company may have a sizable warchest to help weather the storm — at least temporarily.

At the end of June, Volkswagen had $23.7 billion in net liquid assets on hand, and an additional $12 billion in marketable securities it could sell if needed. The company also recently finished its settlement with Suzuki, which bolstered its balance sheet by roughly $4 billion.

#Diesel #Finance #MatthiasMüller #QuarterlyEarnings #Volkswagen #VwDieselScandal

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9 of 14 comments

Hummer on Oct 27, 2015

Oh, a loss of $16,000,000,000 to $86,000,000,000 glad those analyst were able to narrow that down.

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SCE to AUX on Oct 27, 2015

I've suddenly realized that this mess won't be settled by VW; it will be settled in courts around the world. Most of the cost projections exceed - or greatly cut into - VW's assets. At best, their ability to conduct business will be greatly crippled. At worst, the company collapses. For 2016, I predict VW will seek bankruptcy protection from the angry hordes who all want a piece of it. Consumers will flee the pariah, and VW won't be able to meet its obligations. If they remain in the US market by 2017, look for a much, much smaller company - think Mitsubishi- or Volvo-sized.

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- TOTitan on Oct 27, 2015
  
  VW group of America may well shrink drastically but I doubt that will happen in the rest of the world. The numbers are staggering....119 plants in 31 countries employing 593,000 people, who produce 205,000 cars per 5 day week. With that many people working and contributing to their economies do you really think that governments around the world are going to hound VW into bankruptcy? That will not be allowed to happen...period.
  
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- CJinSD on Oct 27, 2015
  
  @TOTitan I could see them losing most of their market share in France and Italy, two countries with domestic auto industries. They'll also be dead in the water in Scandinavian countries.
  
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- SCE to AUX on Oct 27, 2015
  
  @TOTitan Tree-hugging regulators and their lawyers are a powerful force. Yes, it would be astonishing to witness a VW bankruptcy, but if their legal obligations exceed their assets there will need to be a court reckoning to sort it out. I don't see the US government backing down, and VW's small US presence makes it a small risk to the US economy to press for a full accounting from VW. Germany may ultimately decide that VW is 'too big to fail' and offer some protection, but again, only court-ordered settlements will keep millions of plaintiffs from receiving a full settlement. Many customers will be disappointed because they will receive only a partial settlement. You say you lost 20% on trade-in? Too bad, the judge says you'll get a check for 5% instead, based on a secret formula. Instead of just occupying car blogs, it will become periodic front-page news for months around the world. This will lead to a very bad taste for VW in the market, and a much smaller company in the end. Those 593,000 workers can't continue producing cars that people won't buy. VW's days of world domination are over, probably forever.
  
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- CJinSD on Oct 27, 2015
  
  @SCE to AUX It would be fun to see the EU try to figure out how not to enforce its own rules about countries' efforts to protect their companies.
  
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- RobertRyan on Oct 28, 2015
  
  @TOTitan I agree this will not affect market share at all outside NA. Can anyone remember how much the ". Unintentional Acceleration" and the self starting ignitions affected Toyota and GM respectively?
  
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Anonymous on Oct 27, 2015

First of MANY quarterly losses, Welcome to your future VW.

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RideHeight on Oct 28, 2015

Is VW the Lance Armstrong of automobilia? Would a European plebiscite return both to their former status in defiance of nannydom?

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