Volkswagen's Latest Reports Indicate The Company Is Totally Screwed And May Close Factories
2 June 2016 - Carbuzz
After lying its way into a sales frenzy, Volkswagen is in the middle of the hangover that comes from being caught and facing stiff consequences for lessons that most kindergarteners have learned.
Half of those ramifications come from fines, customer payouts, and legal fees that the company will need to pay as it moves forward. The other half is potentially more damaging for the brand because it comes from the lost trust of the consumer.
These are the same people whose collective wallets fueled VW’s rise to the top. A recent financial press release from the company shows the thinly veiled face of a company in serious trouble. On the surface, things look okay with over 2.5 million vehicle deliveries made in the first quarter of this year. Then, the profit margins start to show a glaring problem: VW is barley making any money on its cars and most profits are coming in from its subsidiary brands like Audi and Porsche. Even Bentley is hurting badly in the first quarter of this year, with deliveries down over 30%, amounting to a $59 million loss. Bentley needs to be praying that this doesn’t mean that customers are holding out until they can switch to the Bentayga.
If this is the case, it would mean that the SUV is merely a substitute for its other cars and not an additional must-have car. The fact that VW-badged cars aren’t selling coupled with the looming payout that it will need to deposit into bank accounts of US regulators means that factory shut downs may be the next logical step. So it’s a bit odd that German financial news source Handelsblatt is reporting that VW is considering opening a battery factory like Tesla’s Gigafactory. The multi-billion dollar complex would be a part of VW’s push to clean its image by becoming a leading manufacturer of electric cars. Expect to see plenty of electrified VW’s coming out as long as VW can survive long enough to see it through.