Volkswagen (VW) has returned to profitability during 2016’s first quarter after reporting enormous losses in 2015.
VW managed to stop hemorrhaging profits after the company reported a smaller than expected drop in net profits during the first three months of 2016. VW’s profits dropped by only $2.57 billion, which is below the $3.2 billion drop in profit the company incurred during the same period last year. Analysts projected the company would see a 15 percent drop in profit.
Last year’s massive losses were a result of the company’s fuel emission scandal. VW admitted in September to installing so-called defeat devices in hundreds of thousands of diesel-powered vehicles in the U.S.
“In light of the wide range of challenges we are currently facing, we are satisfied overall with the start we have made to what will undoubtedly be a demanding fiscal year 2016,” Chief Executive Matthias Müller, told reporters Monday. “In the first quarter, we once again managed to limit the economic effects of the diesel issue and achieve respectable results under difficult conditions.”
VW said its operating profits increased 3.4 percent to $3.7 billion, bolstered by the $18 billion the company set aside to help pay down the lawsuits, fines and fees associated with the company’s fuel emission scandal.
VW reclaimed the top spot in the auto market in April despite the massive fallout from the fuel emission scandal.
In fact, VW outsold its closest competitors — Toyota and General Motors — by hundreds of thousands of units during the first quarter.
Analysts speculated in 2015 VW’s sales would be left largely unscathed, because most of the vehicles it sells in China are not diesel powered, thus allowing it to avoid any repercussions in the country.
Less than 1,000 of the three million vehicles VW sells in China are diesel powered.
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