Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

VW's Audi will miss 2016 profitability goal

Published 07/29/2016, 05:10 AM
Updated 07/29/2016, 05:10 AM
© Reuters. View shows Audi logo in Moscow

© Reuters. View shows Audi logo in Moscow

BERLIN (Reuters) - Volkswagen's (DE:VOWG_p) luxury division Audi will miss its benchmark for profitability this year as costs for the diesel emissions scandal and possible recalls of cars fitted with Takata Corp (T:7312) airbags are weighing on results.

First-half operating profit at Audi plunged 18 percent to 2.4 billion euros ($2.66 billion), including 265 million euros of special items which pushed down the brand's operating margin to 8 percent from 9.8 percent a year ago, Audi said on Friday.

Audi, the main contributor to VW group profit, added 165 million euros of provisions in the second quarter for its emissions scandal and effects of potentially faulty Takata airbags, raising the amount of funds set aside for both issues since last year to 563 million euros, a spokesman said.

The Ingolstadt-based carmaker, which to date has been targeting a profit margin of between 8 and 10 percent, on Friday said it now expects "a level slightly below this corridor", without being more specific.

The relapse on profitability coincides with a strategic overhaul at Audi which plans to increase spending on electric cars, digital services and autonomous driving in coming years as part of VW's post-dieselgate shift of business priorities.

"To preserve our innovation and investment course, we will raise efficiency in all parts of the company," finance chief Axel Strotbek said.

VW on Thursday reported a 12 percent drop in quarterly profit at its troubled passenger-car division, a big improvement on the quarter before but highlighting the challenges it still faces to overcome the emissions scandal.

© Reuters. View shows Audi logo in Moscow

But Audi, which slipped behind Daimler's (DE:DAIGn) Mercedes-Benz last year into third place among the top-selling luxury car brands, said it still counts on more than 20 all-new or redesigned models this year to beat 2015's record 1.8 million auto sales.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.