Volkswagen has been pushed into loss by the mounting cost of its emissions scandal.
The first set of accounts published by VW since the scandal broke show it put aside €6.7bn ($7.4bn; £4.8bn).
As a result, VW reported a €3.48bn operating loss for the third quarter of the year, and a €2.52bn pre-tax loss.
In September, VW admitted installing software designed to cheat emissions tests in 11 million of its diesel cars worldwide.
Legal costs
In the three months to the end of September, vehicle sales fell 3.7% and production fell 11.6% compared with the same period last year. However, VW said that it was still forecasting a rise of up to 4% in sales revenue for the whole of the year.
VW said it expected profits for the full year to be “down significantly” as a result of the costs of dealing with the emissions scandal.
Matthias Mueller, VW’s chief executive and chairman of the board of Management, said: “The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear. We will do everything in our power to win back the trust we have lost.”
Meanwhile the group has started retrenching and announced earlier this month it would reduce its research and development budget. In the last three months it has reduced R&D by more than €1bn.
VW says the legal costs of the scandal “cannot be estimated at the current time”. But it said in its quarterly report that the types of litigation it expects to face are:
1. Criminal and civil charges from national regulatory authorities.
2. Class action or individual civil lawsuits from customers.
3. Class action or individual civil lawsuits from investors.
Volkswagen shares rose 3.2% on the results, and were the best performing stock on the German Dax 30 index in the first hour of trade.
At the scene: Emily Young, Wolfsburg
There’s an air of defiance about VW’s workers in Wolfsburg.
They feel that the reaction to the scandal has been overdone. The environmental damage is nothing compared to BP’s Deepwater Horizon oil spill and the cars are still greener than the American gas guzzlers, they say.
Detractors would of course point to the fact that the problem lies more with the behaviour of the company than the impact on the environment.
But if VW is going to successfully navigate this crisis – it will need the backing of its workers. For now, it appears to have that.
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Source: BBC