ALL FOR ONE

If not for Audi and Porsche, Volkswagen would be in much deeper trouble

Fortunately, Volkswagen isn’t just Volkswagen. For all its troubles, the group is proving relatively resilient thanks to the other brands in its stable.

In the nine months since the German carmaker was caught cheating on emissions tests, deliveries of VW-branded cars have dropped by 2.3%. In its home European market, total passenger car registrations rose by 10% over the same period.

The profit picture is even uglier. Operating profit at the VW brand has plunged by 66% in the nine months since “Dieselgate.” Good thing, then, that sales of high-margin Audis and Porsches continue to grow, as detailed in the group’s latest earnings report, published today (July 28).

Volkswagen became synonymous with scandal last September, when its long history of cheating on emissions tests came to light, leading to its CEO stepping down and its shares to sink. This week, it got preliminary approval for a $15 billion settlement in the US over the scandal. It’s an eye-watering amount, but the carmaker has almost $34 billion in cash on its balance sheet to cover it (and other costs associated with the scandal around the world).

Audi and Porsche have been the real money makers for Volkswagen for some time. In the first half of this year, for example, Porsche accounted for only 2% of the group’s vehicle sales but 10% of its revenue and nearly a quarter of its operating profit. VW’s own-brand cars—the ones most tainted by scandal, even though some Audi and Porsche models were also affected—are dragging the group down.

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