Tag Archive | "Volkswagen AG"

Volkswagen Sales Fall in October Amid Emissions Scandal


BERLIN— Volkswagen AG on Friday reported a drop in new-car sales in October as a result of sharp declines in some emerging markets and troubles for its namesake VW brand in the U.S. and Europe stemming from the company’s emissions scandal.

Meanwhile, the Wolfsburg, Germany-based auto group is negotiating with a group of banks to assemble up to €20 billion in short-term financing, as it braces for emissions-related costs, according to a person familiar with the matter. Volkswagen has already earmarked nearly $10 billion to cover costs related to the scandal.

Talks are set to begin next week to assemble the debt financing, which Volkswagen wants to have in place by the end of the year, the person said.

The company’s global sales last month fell 3.5% from a year earlier to 831,300 vehicles, with declines in Russia and Brazil leading the way. Auto sales in the two countries have suffered badly in slumping economies. For the year through October, Volkswagen’s sales dropped 1.7% to 8.3 million, according to The Wall Street Journal.

The company’s VW, Skoda and SEAT brands were most affected by the emissions crisis, and they all showed global declines for the month. The steepest was for VW vehicles, Volkswagen’s biggest business, which fell 5.3% to 490,000.

Sales in Western Europe, the brand’s biggest market after China, slipped 1.3%, as several countries including France and Italy ordered a halt to VW sales in the wake of the crisis. VW’s falloff contrasts with a robust recovery in the Western European market overall, including a 10% increase in new-car registrations in September.

“In Western Europe, the temporary sales-stops for vehicles affected by the diesel issue had an impact on sales,” said Jürgen Stackmann, board member at the VW brand in charge of sales.

A company spokesman said the sales-stops in Europe have been lifted and wouldn’t affect November sales.

Volkswagen plunged into crisis in September, when U.S. environmental regulators said the auto maker installed software in nearly 500,000 diesel vehicles in the U.S. that helped them evade emissions standards. Volkswagen has since acknowledged installing the software in nearly 11 million diesel vehicles world-wide.

Most of the vehicles affected can be repaired with a simple software update beginning next year, Volkswagen has said. About 540,000 cars, those with older 1.6-liter diesel engines, will need a more complicated hardware fix.

Next week, Volkswagen will present its proposed solutions for repairing the cars to regulators in Europe and the U.S.

Volkswagen executives are expected to present a work-around fix on Monday for the 1.6-liter diesel engines to a committee of experts set up by German Transport Minister Alexander Dobrindt, a person close to the company told The Wall Street Journal.

The fix, the person said, is expected to be less complicated and not as costly as initially thought, and will bring the vehicles into compliance with European emissions standards.

Volkswagen officials are expected to meet officials from the U.S. Environmental Protection Agency on Nov. 20 to present a solution for nearly 500,000 cars in the U.S.

The EPA has also alleged that Volkswagen installed cheating software on 10,000 larger 3.0-liter engines used in luxury sedans and sport-utility vehicles made by VW, Audi and Porsche. Volkswagen disputes the claim, and says the emissions-control software on those vehicles is legal and shouldn’t be considered a “defeat device.”

Volkswagen also disclosed last week that it understated greenhouse-gas emissions and fuel consumption in as many as 800,000 vehicles in Europe, including gasoline-powered vehicles. On Friday, the company said the estimate included 430,000 model-year 2016 vehicles and that it was still trying to identify models from earlier years.

The company is currently testing these vehicles to see how much actual CO2 emissions veer from what the company stated when they were certified. Some cars will likely be reclassified and Volkswagen has agreed to pay any additional back sales tax.

Volkswagen also isn’t ruling out that it may have to take back some of the cars that understated CO2 emissions, a spokesman said. No decisions have been made yet, he said, and any solution would depend on the outcome of the tests.

In the U.S., where the scandal first erupted, deliveries for the Volkswagen group overall rose 5.7% in October, while VW brand sales were up 0.2%. Despite the uptick, Volkswagen trailed other auto makers in the U.S., where light-vehicle sales increased nearly 14% in October. Sales for General Motors Co., for example, climbed about 16%.

Volkswagen offered a $1,000 goodwill package this past week to U.S. customers whose vehicles were affected by the software, in what it called a first step in rebuilding trust.

“The entire company is working to restore the trust of our customers,” Mr. Stackmann said. Volkswagen would “take care of each individual customer who is affected,” he added.

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VW tells dealers to stop selling some 2014 model cars


(Reuters) – Volkswagen AG said it will stop selling about 27,000 current model year Jettas, Beetles, Beetle Convertibles and Passats with 1.8-liter engines and automatic transmissions in North America because transmission oil may leak, the automaker said on Wednesday.

In the cars, made after February 1, an o-ring that connects the transmission cooler to the transmission is defective, which may lead to a leak of fluid. This can cause a fire risk under extreme conditions, VW said.

Of the 27,000 vehicles, 25,000 are in the United States and about 2,000 in Canada, VW said. No fires, accidents or injuries have been reported as a result of the defect.

Volkswagen said it would notify federal safety regulators and contact customers with the affected vehicles. Vehicles sold outside North America were not affected.

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Volkswagen Sticks to Guidance as Profit Rises


FRANKFURT — Volkswagen AG reported a higher second-quarter profit and stuck to its full-year target of keeping earnings stable despite large investments in new vehicles and intensifying price pressure in Western Europe, where demand for cars has been declining for months.

“Our strong position in the international markets will enable us to outperform the market as a whole—despite the challenging environment,” Chief Executive Martin Winterkorn said.

The German auto giant’s results highlight the difference between car makers whose reliance on the Western European market is causing them hefty losses and peers with a more diversified global presence, including a big footprint in more dynamic markets such as China, North America or Russia, according to The Wall Street Journal.

Volkswagen’s second-quarter net profit rose 20 percent to 5.61 billion ($6.76 billion) and surged 40 percent to €8.77 billion in the first half of the year, boosted by a book gain related to option valuations on Volkswagen’s stake in sports car maker Porsche Automobil Holding SE’s and higher profit generated from the business.

Operating profit rose 3.4 percent on the year to €3.28 billion in the second quarter, while revenue rose 19 percent to €48.05 billion, driven by a 13.4 percent rise in vehicle sales to 2.39 million units.

In addition to its consolidated operating profit, Volkswagen earned another €1.8 billion through its two Chinese joint-ventures in the first six months, up from €1.2 billion in the same period last year.

Earlier this month, Volkswagen hammered out a deal to take over the remaining 50.1 percent stake in Porsche unit it doesn’t already own as of Aug. 1 for €4.46 billion in cash plus one common share.

Porsche, one of the world’s most profitable car makers, will join Volkswagen’s stable of seven car brands, three commercial vehicle brands and the newly acquired motorbike unit Ducati.

The Audi premium brand retained its position as Volkswagen’s largest earnings contributor in the first six months with a 13.2 percent rise in operating profit to €2.88 billion, compared with a 3.8 percent increase to €2.21 billion at its namesake VW passenger car brand.

The Czech Skoda brand contributed €449 million to operating profit, up 9 percent, while the operating loss at VW’s troubled Spanish Seat brand narrowed by €6 million to €42 million.

Volkswagen posted record vehicles sales and profit last year, mainly because of its large footprint in emerging markets, superior pricing power in the cutthroat European car market and sales gains in the U.S. But the aggressive expansion, along with its growing industrial complexity, has sparked concerns that the company is becoming increasingly difficult to manage.

But Volkswagen said it “remains confident about the second half of the year” and expects to reach its goals for the year as a whole.

Europe’s largest auto maker by sales and the world’s No. 2 behind General Motors Co. reiterated it wants to increase revenue and sales volume in 2012.

Operating profit is expected to match last year’s €11.3 billion as large-scale investments are anticipated to offset higher sales.

Volkswagen shares initially gained on the earnings numbers, which analysts described as robust and slightly better than expected. But the stock lost some ground later, which traders attributed to profit-taking.

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BMW, Audi Post Record Sales Amid China Boom


FRANKFURT — Global car sales at BMW AG and Volkswagen AG’s Audi brand rose to monthly records in May, putting the world’s two best-selling luxury-car makers on course for another bumper year as mass-market rivals in Europe remain under pressure.

“The current order intake proves that the first half of the year will exceed our expectations in all regions,” Audi sales chief Peter Schwarzenbauer said Monday.

“We have therefore now set ourselves a new target of 1.4 million deliveries for the year as a whole,” Mr. Schwarzenbauer said. That figure is a more precise and upbeat full-year outlook than Audi’s previous guidance, which projected overall car-market growth of at least 4 percent this year.

Audi narrowed the gap to market leader BMW in May, after overtaking Daimler AG’s Mercedes-Benz brand as the world’s No. 2 luxury-car maker by vehicle sales last year, reported The Wall Street Journal. Audi’s sales rose almost 14 percent to 128,900 cars last month, compared with a 6.6 percent increase to 129,150 cars at BMW’s namesake brand.

In the first five months of 2012, Audi’s sales rose 12 percent year-to-year to 600,200 cars. The BMW brand sold 607,207 vehicles world-wide, up 9.3 percent.

Global luxury-car sales have been largely unaffected so far by swirling economic concerns in Europe as governments have reduced public spending to try to bring their finances under control, damping overall demand for new cars. European auto-makers association ACEA warned last week that the market would shrink about 7 percent this year.

The contracting market is posing a significant problem for mass-market manufacturers with a strong reliance on European sales, such as PSA Peugeot-Citroën SA and Renault SA of France, Fiat SpA of Italy and the Opel/Vauxhall division of U.S.-based General Motors Co.

“Our growth in Europe continues to clearly buck the market trend, with especially stable development in Germany and the U.K.,” Mr. Schwarzenbauer said. He added that Audi is targeting annual sales records in both markets this year.

China has been the primary growth driver for global premium auto makers in recent months, followed by robust demand in the U.S.

Audi and BMW gave no hints that they expect the luxury-car boom to end any time soon.

“New products such as the BMW 6-series Gran Coupe, which we launched on June 1, as well as the new BMW 7-series, will continue to drive momentum,” said BMW sales chief Ian Robertson. “We are well on our way to achieving a new all-time high for sales in the year 2012.”

The Munich-based company is benefiting from a fresh lineup, including new versions of high-volume models such as the compact 1-series and the 5-series.

The revamped 5-series accounted for 32,236 car sales in May, up 22 percent year-to-year. Sales of the five-door BMW 1-series hatchback surged 59 percent to 14,748 cars. The new three-door version of the 1-series will be introduced in September along with a new generation of the 3-series Touring model.

Sales at BMW’s Mini brand improved 5.5 percent to 27,527 vehicles in May, driven by a 40 percent sales jump in China to 2,315 cars. The U.S. continued to be the brand’s largest single market, with 6,153 cars sold last month, up 6.1 percent.

Mini-brand sales totaled 119,532 vehicles for the first five months of 2012, up 7.9 percent from the year-earlier period.

Last week, Mercedes-Benz said it sold 113,136 cars world-wide in May, a 4 percent rise from the same month in 2011. Year-to-date, the company based in Stuttgart, Germany, posted an 8.4 percent rise in sales to 531,382 vehicles. Mercedes-Benz lost some ground to its rivals in the crucial Chinese market in recent weeks due to limited availability of a new generation of the company’s B-Class amid a model changeover.

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Charges Filed in Porsche Credit Fraud Case


FRANKFURT – Porsche Automobil Holding SE said Tuesday that former finance chief Holger Härter and two other managers have been charged with credit fraud in the auto maker’s attempted takeover of Volkswagen AG.

The Stuttgart prosecutors’ office said the three are accused of providing inaccurate information when negotiating follow-up financing for a €10 billion ($13.22 billion) loan maturing in March 2009 in connection with the takeover attempt, reported The Wall Street Journal.

Mr. Härter’s lawyer couldn’t immediately be reached for comment, but news agency DAPD reported that his lawyer said Mr. Härter rejected the allegations.

Porsche said the other two people didn’t hold executive titles. The prosecutors’ office didn’t disclose their names but said they worked for Porsche’s finance department and at least one still works for the German car company.

In a written statement to one bank, the three managers claimed the liquidity requirement for the exercise of call options for Volkswagen shares would be about €1.4 billion lower than it actually was, according to the prosecutors’ office. They are also accused of concealing that Porsche had sold put options for about 45 million ordinary Volkswagen shares.

At the same time, investigations into accusations of market manipulation and embezzlement against former executive-board members are continuing. The investigations are very complex and time-consuming and won’t be finished before midyear, the prosecutors’ office said.

Porsche initially tried to take over its much-larger peer, spending about €23 billion over three years to build up a 51 percent stake in Volkswagen. But the bold plan backfired when credit markets dried up and the company’s debt ballooned.

In October 2008, Porsche disclosed it had a nearly 75 percent stake in Volkswagen using so-called cash-settled options to build up its stake. Cash-settled options, which are settled in cash instead of shares, didn’t need to be disclosed to regulators under German law at the time.

The news of its stake triggered a huge run-up in Volkswagen shares, making the German auto maker the world’s most valuable publicly traded company for a two-day period that month.

Porsche’s goal was to raise its stake to 75 percent, which would have allowed the Stuttgart-based company to get its hands on Volkswagen’s large cash reserves to help it pay for the cost of the takeover.

But by May 2009, the global recession and slumping car sales put Porsche’s bid on the ropes. The sports-car maker’s plan to raise its stake above 75 percent was thwarted and it was forced to seek a rescue by Volkswagen.

Its effort also triggered a legal backlash. Several international investment funds accused Porsche of cornering the market in 2008 during its ill-fated takeover attempt of Volkswagen.

In August 2009, Volkswagen had the upper hand in negotiations. It signed a complex agreement to forge a joint company. Legal and tax considerations since have stalled integration. Earlier this week, Volkswagen Chief Financial Officer Hans Dieter Poetsch said that talks on integrating Porsche’s sports-car unit into its brands continue, but the timing of a deal was still uncertain.

A key aspect of the current evaluation is a potential tax payment of about €1 billion if Volkswagen and Porsche go ahead with the deal before mid-2014.

Volkswagen can exercise the respective call option to buy the remaining 50.1 percent stake in the sports-car unit between March 1, 2013, and April 30, 2013, or between Aug. 1, 2014, and Sept. 30, 2014. An earlier deal, however, would enable Volkswagen and Porsche to reap more cost synergies from joint operation.

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Volkswagen Reports Record 2011 Profit on SUV Sales


Volkswagen AG, Europe’s largest automaker, reported record 2011 profit as demand increased for Audi and VW sport-utility vehicles.

Earnings before interest and taxes advanced 58 percent to 11.3 billion euros ($15.1 billion), the Wolfsburg, Germany-based carmaker said in a statement today. Profit matched the 11.3 billion-euro average estimate of 22 analysts surveyed by Bloomberg. Revenue gained 26 percent to 159 billion euros.

Chief Executive Officer Martin Winterkorn is adding factories in a bid to surpass General Motors Co. as the world’s biggest carmaker. VW, which delivered a record 8.27 million vehicles in 2011, aims for sales growth this year outpacing the market’s expansion. The German company has expanded production of SUVs such as the VW Tiguan and Audi Q5 to meet high demand in the U.S. and China, its largest market.

“There’s not a real positive surprise, so there might be some disappointment,” said Juergen Pieper, a Frankfurt-based analyst with Bankhaus Metzler. “The quality of the earnings is probably better, but more explanation is needed.”

The stock rose 10 cents, or 0.1 percent, to 139.25 euros in Frankfurt trading today. The shares have gained 20 percent this year, valuing the carmaker at 61 billion euros.

Volkswagen raised the dividend for 2011 by 35 percent to 3.06 euros per preferred share from 2.26 euros a year earlier. The dividend per common share for last year will be 3 euros. The carmaker will release more details on 2011 earnings on March 12.

Future growth may also come from pending mergers. VW is exploring options to combine with majority shareholder Porsche SE after scrapping plans last year for a merger because of legal tangles.

To avoid further delays, VW may drop the full merger and instead buy Porsche’s carmaking business, two people with direct knowledge of the situation said in November. VW already owns 49.9 percent of Porsche’s automaking business and holds an option to purchase the remaining 50.1 percent.

Volkswagen’s 2011 net income was lifted by a gain from the revaluation of the Porsche options. The figure more than doubled to 15.4 billion euros from 7.23 billion euros.

VW last year took a majority stake in German truckmaker MAN SE, raising its holding to 55.9 percent. VW has been seeking closer links between MAN and Soedertaelje, Sweden-based Scania AB, which it also controls, with a goal of forging a three-way truckmaking alliance. Such a tie-up may save as much as 1 billion euros in annual costs, VW has said.

VW’s net liquidity in 2011 dropped 8.6 percent to 17 billion euros because of 7 billion euros in spending on equity investments, including the increase in the MAN stake.

“VW generated a negative cash flow in the fourth quarter,” Michael Punzet, a DZ Bank analyst who recommends buying the shares, said in a note to investors. “In our view, this is mainly related to production cuts at year end and some investments at plants” for a new underbody that will be used as the basis for several vehicles.

Investments in property, plants and equipment in 2011 rose 40 percent to 7.93 billion euros, VW said today.

The maker of the Golf hatchback, VW’s best-selling vehicle, plans to spend a record 62.4 billion euros over the next five years on plants, models, research and development to underpin its global expansion. VW wants to hire more than 50,000 workers through 2018 as it targets more than 10 million autos per year.

Daimler AG this month forecast that operating profit this year will be “in the magnitude” of 2011’s 8.98 billion euros. CEO Dieter Zetsche has vowed to retake the luxury-car lead from Bayerische Motoren Werke AG after slipping last year to third behind Audi. Daimler predicts industrywide auto deliveries will rise 4 percent globally this year.

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