Volkswagen, hit by emissions scandal, posts its first loss in years

Volkswagen said it had a net loss of $1.84 billion in the third quarter, its first quarterly decline in more than a decade, as it set aside a huge sum to help cover the expected damage from the company’s emissions cheating scandal.

The loss, totaling 1.67 billion euros, compared with a profit of 2.97 billion euros in the third quarter of 2014.

Volkswagen subtracted 6.7 billion euros from its profit to cover the cost of recalling and repairing about 9 million cars equipped with illegal software intended to cheat on emissions tests. The effect of the deceptive software on sales and revenue is likely to worsen in coming quarters, analysts say.

Volkswagen has already said the cost of the scandal will exceed the 6.7 billion euros it has set aside. The company said it expects profit for full-year 2015 “to be down significantly” from 2014.

During tests, the Volkswagen diesel engines with illegal software make full use of pollution controls and can pass emissions tests. But during regular operation, the engines emit many times the allowed amount of nitrogen oxide.

“The initial impact of the current situation is becoming clear,” Matthias Mueller, Volkswagen’s chief executive, said in a statement. “We will do everything in our power to win back the trust we have lost.”

The earnings report provided an initial measure of how the scandal was likely to hurt Volkswagen’s bottom line and interrupt a period of steady growth that allowed the company to briefly surpass Toyota this year as the world’s largest carmaker.

Because the deception became known Sept. 18, less than two weeks before the end of the most recent reporting period, the third-quarter results provided only a glimpse of the fallout from the company’s admitted breach of trust.

Sales in the quarter rose 5.3 percent to 51.5 billion euros, Volkswagen said, largely because of gains by its Audi, Bentley and Porsche divisions.

This story was originally published October 28, 2015 at 3:11 PM with the headline "Volkswagen, hit by emissions scandal, posts its first loss in years."