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VW Beginning to Face Serious Cash-flow Consequences of Emissions-Cheating Scandal

An “unprecedented cash drain” as a result of Volkswagen’s emissions-cheating scandal has required the automaker to strip costs and revive returns at its largest division, the VW brand (via Bloomberg).

Despite the lingering fallout from Volkswagen AG’s emissions-cheating scandal, the automaker is reporting a sharp rise in first-quarter profit, according to MarketWatch. Cost cutting and higher margins at its VW brand have helped boost net profit 45% to $3.66 billion. The company expects a 4% rise in full-year revenue, predicting an operating profit on sales of between 6% and 7% this year.

While the company, for now, appears to be rising above the financial crisis that plagued it beginning in 2015, Chief Finance Officer Frank Witter said fines would result in a cash drain in the “double-digit billion euro range” in 2017; he added that the company would continue to fight for every single customer.

In 2015, VW admitted to installing emissions-cheating software in millions of cars that allowed them to dupe emissions tests. The company faces payouts of $24.7 billion in fines, buybacks and repairs.

 

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