Volkswagen Group’s namesake car brand slumped to a loss in the fourth quarter as the emissions-cheating scandal tarnished its reputation and added costs to appease customers and dealers.
The VW brand posted a loss of 127 million euros ($144 million) in the final three months of 2015 from a profit of 780 million euros a year earlier, according to data released by the German carmaker.
VW Group’s biggest unit was hit by “market support measures linked to the emissions issue” as well as declines in the Russian and Brazilian markets, the company said in a statement on Thursday.
“Volkswagen is far more than crisis,” CEO Matthias Mueller said in a speech prepared for a press conference at its Wolfsburg headquarters. “But we can nonetheless hardly avoid saying that the current situation demands everything of us, in every respect — including financially.”
Reviving the VW marque is critical to the carmaker’s recovery from the crisis. The company’s leader in vehicle sales and revenue, which was struggling with weak profitability even before the crisis, has become a battleground as the automaker’s powerful worker representatives balk at restructuring measures pushed by Herbert Diess, the head of the VW brand.
Diess, who joined Volkswagen from BMW last July, has embarked on a 12-point program to revive weak margins at the brand and accelerate cost savings initiated under predecessor Martin Winterkorn, who resigned as VW brand chief and VW Group CEO after the scandal erupted last September. VW has been slow to tackle weak profits at the brand outside China in recent years, relying instead on surging sales in Asia and the fatter margins at upscale sister brands Audi and Porsche.
The VW brand, which had targeted operating profit of 6 percent of sales before the crisis, reported a margin of 2 percent for 2015.
In addition to the effect of the crisis on operations, the unit was hit by financial charges last year totaling 16.4 billion euros for damages from the manipulation scandal as well as restructuring measures in South America and provisions to recall cars with potentially faulty airbags in North America.