By on May 31, 2016

Volkswagen Golf family

The diesel emissions scandal can’t be blamed for all of Volkswagen’s sales woes.

Today, the automaker announced first-quarter profits fell 86 percent compared to the same time last year, not surprising given its sidelined diesel models, the hit to its reputation, and a hastily cobbled together $18.2 billion scandal fund.

Worldwide sales of Volkswagen passenger cars fell 1.3 percent (year-over-year) this quarter, but the scandal doesn’t tell the whole story. That number would have been in positive territory if select countries weren’t grab-your-money-and-get-out economic disasters.

The loss of global sales for the brand amounts to 19,924 vehicles. When deliveries of all Volkswagen Group makes are factored in — every VW, Audi, Skoda, Seat, Bentley, Porsche and Lamborghini — the company posted a sales gain of 0.6 percent.

In any given country, VW makes up the biggest slice of the group’s sales pie — a slice that gets bigger in overseas and developing nations.

Going by the delivery numbers, it looks like economic turmoil in a few countries erased the possibility of overall VW sales growth.

North American countries aren’t among them. The blame for that continent’s first-quarter VW Group sales decline of 2.2 percent (down 5.5 percent in the U.S., 10.6 percent in Canada, and up 10.5 percent in Mexico) falls mainly on the scandal and all those sidelined diesels.

Brazil, a big VW customer now wracked with corruption and a plummeting GDP, is a large part of the picture. Thanks to Brazil’s moribund economy, which Forbes describes as “stuck in the mud and rolling back on a cliff, 10,000 feet above hungry man eating dinosaurs,” sales fell 37.6 percent.

That’s a whopping 38,458 units erased from last year’s first-quarter figures. And the Amarok pickup is the only VW diesel in that country.

Russia, whose economy has been on the skids for some time (causing some automakers to flee or delay investment), saw its VW Group sales fall 15.5 percent. That’s 6,338 fewer deliveries for a country that declared it didn’t really care about diesel emissions.

Japan’s weak economy and changing demographics pose a challenge even for domestic automakers. For VW, it meant a sales slide of 21.2 percent, or 5,920 fewer deliveries.

These three countries represent the biggest sales drops for the company, and they each have an underlying affliction totally unrelated to the company’s scandal. The brightest light for VW Group, like most automakers, was China. Deliveries were up 6.4 percent (57,311 units), but it wasn’t nearly enough to offset the losses in other key markets.

Unless those markets turn around, it’s going to mean an even steeper uphill climb for the brand.

[Image: Volkswagen of America]

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18 Comments on “Volkswagen Would Have Seen a Sales Gain if Certain Countries Weren’t Basket Cases...”

  • avatar

    Unless and until the Germans stop buying them, they will never change how they do business.
    Rule number 1: VW is right
    Rule number 2: If VW is wrong, refer back to rule number 1

  • avatar

    Profit? Global sales not falling? Really? Why are they not dead after TTAC and B&B burried them so many times?

  • avatar

    “Volkswagen Would Have Seen a Sales Gain if Certain Countries Weren’t Basket Cases.”

    If my mother had wheels she would have been a bike.

    • 0 avatar

      Actually MAN and Scania are looking for an acquisition in NA, Navistar most likely target, but PACCAR is now on the menu after being hit with a US$1Billion fine over irregularities in their DAF truck division,as a result they made a loss this last financial year.
      VW has majority financial holdings in both Scania and MAN

    • 0 avatar

      And if my aunt had a package, she’d be my uncle.

  • avatar

    Interesting that Canada saw double the drop the USA did. More Canadians really wanted a VW diesel, or more Americans were enticed into VW showrooms by screamin’ deals?

    • 0 avatar
      SCE to AUX

      Good point. Screamin’ deals don’t prop up sales or margins forever.

    • 0 avatar

      I think a bit of both….

      With the higher fuel prices here (now touching $1.10/L) TDI’s were a large portion of the total sales mix compared to the gasoline.
      It’s not like the Jetta Hybrid = Jetta Tdi + Golf Tdi + Passat Tdi

      I also think there have been more deals in the US than Canada. I hit the incentives and offers page a weeek ago, and didn’t actually see anything.
      Likely also a combination that the USA buys a larger proportion of discounted Jettas compared to Golfs, compared to Canada.

  • avatar

    Rough math tells me 1.10 a litre = $4.25 USD per US gallon. Yes, the diesel was very popular here.

  • avatar

    Right ……i knew that number didn’t feel quite correct ….there’s “rough math” then just lousy math : ((

  • avatar

    Sales fall in Japan is clearly related to the scandal.
    Golf was locally marketed as a car for honest citizen with slightly higher and eco friendly living standard, who’ll buy organic vegetable.
    “cheating brand” is the last factor those people want on their proud living statement car.

  • avatar

    Well, now we know where Marcelo’s Brazil reports went. I was wondering what was happening to Fiat in Brazil, since it was ready to overtake Volkswagen there, before the troubles.

  • avatar

    Numbers are great when you cherry-pick them. VAG’s EBITDA is up, they have about as much cash on hand as they had this time last year, and their overall profit is steady. Their current liabilities went up because they took some loans, but they also sold a lot of bonds to offset that.

    They’re an incredibly profitable company in great financial shape. Dieselgate is an annoyance, no more.

    In fact, nobody cares about Dieselgate except regulators, a few investors, and a couple greens who don’t and never would own one…if VAG’s TDIs came back on the market in NA tomorrow those sales would be nearly as strong as before the scandal. The only concern among current owners is about trade in value – private party sale prices are strong in the parts of the country where these were popular and non-CPO used car sales at dealers are at practically CPO prices. Demand is still strong, but VW dealers can’t sell new or CPO. Owners are waiting to see what kind of compensation package comes their way so they’re not getting rid of them, so supply is low.

    America is not the center of the automotive universe, as much as we would like to think we are – after VAG takes the initial loss in whatever quarter the final settlement is announced, they’ll bounce right back, mostly in the strength of China’s sales.

    And they won’t need government bailouts to do it, either.

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