Volkswagen's emissions scandal fails to register as the company’s profit has more than doubled
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Volkswagen's financial results have improved despite the ongoing fallout from the company's emission scandal.
Despite the restrictions on cars with diesel engines and multibillion provisions for the scandal fallout, Volkswagen recorded very good financial results for the financial year 2017. The group’s profit margin is estimated between 6-7% in 2017. The group’s sale for 2017 reached to EUR230.7bn increasing by 6.2% and the net profit for the same period reached around EUR11.4bn more than double the previous year's result.
The main reason behind 2017 profit is the broad range of other brands owned by VW - the group includes, among others, such brands as: Seat, Lamborghini, Skoda. The group’s 2017 sales were EUR230.7bn (circa $260.5bn) increasing by 6.2% compared to 2016 and the net profit for the same period reached around EUR11.4bn (about $12.9bn) more than double on 2016 figures.
Volkswagen's profits for the third quarter of 2017 increased by 15% despite the costs the company incurred in connection with the diesel scandal. The company's success was due to cost cutting programs implemented in 2016 in the passenger car segment, and double-digit sales increases in China and in Europe.
The company's future growth plan is electric and hybrid cars, significantly boosting its investment in the technology, which it began researching in earnest two years ago. The results have lead Volkswagen to triple the funding for the initiative, by reducing the manpower by 30,000 positions. It plans to release 50 electric car models by 2025.
VW revealed in 2015 that it had installed software in 11m of its cars designed to understate their emissions of nitrogen oxide during official tests. US regulators fined them EUR2.5bn, and the company admits it has cost more than EUR25bn in total. However, the company has so far faced little action from Europe or Germany for its actions.
Volkswagen remains one of the largest automotive manufacturers on the planet, and the scandal appears to have done little to dent trust in the company's reputation. The growth in Chinese sales suggests that for now, the company's brand appear to be more powerful than its environmentalist credentials. However, the company's commitment to electric cars sees it acknowledging this model is on borrowed time though.