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Emissions Scandal Volkswagen Volkswagen (VW)

Sales of Volkswagen-branded cars tank 83% but bosses vow 2016 will be a 'transitional year' as it emerges from emissions scandal

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By Jennifer Faull, Deputy Editor

May 31, 2016 | 3 min read

Volkswagen’s attempts to repair the damage of the damming emissions scandal appear to have fallen flat as the company reported a dramatic 83 per cent decline in sales of VW-branded cars leading to a fall in profits of 86 per cent to €73m.

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It will come as a blow to the brand having invested heavily in marketing in recent months to try and win back customers disenchanted with the brand following the revelation that it had cheated on diesel emissions tests.

Last February, it departed from the usual format for car adverts and released a John Lewis-esque campaign in the hope of eliciting a bit of nostalgia and remind consumers that it’s a “lifelong companion”

It’s clear though that despite the somewhat heavy-handed marketing push, the brand has work to do if it’s to repair the trust with customers

Chairman Matthias Müller said that despite the “wide range” of challenges and facing what will “undoubtedly be a demanding fiscal year” the Group is sitting on “robust foundations”.

“2016 will be a transitional year for Volkswagen that will see us fundamentally realign the Group,” said Müller.

“The Group’s robust financial strength and earnings power are key to our ability to take the necessary decisions calmly and diligently, and to resolve the strategic policies that will shape our future with the necessary determination.”

A Volkswagen Brand Board of Management was formed in wake of the scandal which has been trying to forge a path forward through a renewed focus on establishing its environmental credentials and creating best in class electric cars and clean exhaust emission systems.

Behind the scenes, Müeller has also been championing a “spirit of openness and cooperation to life”.

But the full impact of the scandal is still to emerge after it struck a deal with the US Department of Justice which will see it buy back and "substantially" compensate more than 500,000 American owners of its diesel cars affected by the emissions cheating. Full details are expected in June. Some £16bn has been put aside to deal with the fall out but analysts project the final figure could be double that.

Across the Group as a whole – including its financial services division – sales were down 3.4 per cent that with resulted in a stark warning that sales revenue for the whole of 2016 to be up to five per cent lower than last year.

Looking forward it also predicted "a marked decrease in sales revenue" in 2016 for its passenger car brands such as Audi, Seat and Skoda.

Shares fell three per cent on the news, meaning they are now down by 40 per cent over the past 12 months.

Emissions Scandal Volkswagen Volkswagen (VW)

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