Volkswagen vows to overcome emissions-cheating crisis

By AFP

VW has started recalling the affected cars in Europe to replace the rogue software.

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Embattled German carmaker Volkswagen vowed Thursday to overcome its current crisis triggered by the engine-rigging scandal, insisting it would not allow itself to be slowed down by the affair and would drive back to profit this year.

"Volkswagen is far more than (just a) crisis," chief executive Matthias Mueller told the group's annual news conference, after the emissions-cheating scandal pushed VW into its first year-end loss in more than 20 years last year.

"But we can nonetheless hardly avoid saying that the current situation demands everything of us , in every respect -- including financially," he added.

As already reported last week, VW unveiled a massive loss of 1.58 billion euros ($1.8 billion) in 2015 after setting aside 16.2 billion euros in provisions to cover the potential fines, lawsuits and recall costs it foresees from the scandal so far.

It was the auto giant's first loss since 1993. In 2014, it chalked up a profit of 10.8 billion euros.

Nevertheless, the group's finance chief, Frank Witter, insisted VW would drive back into the black in 2016.

"We're starting from the assumption that we'll end the year in profit," Witter said.

CEO Mueller told the news conference that the huge provisions would cover the "technical measures related to the diesel engines."

VW has started recalling the affected cars in Europe to replace the rogue software, known as "defeat devices" because they deliberately skew a car's emissions when undergoing testing.

But it has also set aside 7.8 billion euros to repurchase the affected vehicles and another 7.0 billion euros for potential legal risks, with the carmaker facing regulatory fines and compensation claims.

Mueller also said VW was doing everything within its power to identify the masterminds behind the scam via an internal enquiry.

'Challenging' year ahead'

"We ourselves have the closest interest in learning everything possible about both the causes and the responsibilities," he said.

Looking ahead to the current year, Mueller acknowledged that "2016 will again be very challenging."

Nevertheless, "we are not letting the crisis slow us down, but are stepping on the gas -- in all of our brands, and in all relevant markets," the CEO said.

"All in all, from today's perspective we have good chances of again recording solid growth in our operating business in 2016."

Volkswagen would emerge stronger from the current crisis, Mueller insisted, "because we have a solid position on the operational side. Because our financial substance is strong. Because we know what needs to be done. And because we will do whatever is necessary," he said.

CFO Witter also indicated that 2016 would be challenging.

"It is not only fundamental internal changes that pose challenges this year but also the overall economic environment," he said.

"This fiscal year will be characterised by continuing subdued growth prospects and sustained political uncertainty as well as strong currency fluctuations, difficult developments in some markets and the consequences of the diesel issue," the CFO continued.

"Nevertheless, our goal is to reach the previous year's volume of deliveries again and strengthen our sound economic position," he concluded.