Volkswagen Group seized the top spot as the world's biggest auto manufacturer in 2016, despite the shadow of the diesel emissions scandal which had emerged a year earlier. Volkswagen was found to have installed sophisticated software in its diesel engines that was designed specifically to cheat emissions tests, and make its vehicles appear more environmentally friendly than was the case. The repercussions of that scandal were wide-ranging and very expensive, and are still buffeting the group four years later, but don't appear to have dented the popularity of Volkswagen's cars. The group controls a broad portfolio of passenger car brands: VW itself, Audi, Seat, Skoda, Lamborghini, Bentley, Bugatti and Porsche as well, now, as Ducati motorcycles Towards the end of 2009 it agreed to acquire a strategic shareholding in Japanese company Suzuki, but that partnership failed to deliver significant results and was later dismantled. The group has also built a dominant position in trucks through controlling stakes in MAN and Scania (now grouped with VW Commercial Vehicles under the corporate banner of Traton), and has extensive interests in financial services and property. Yet despite its range, Volkswagen has struggled to combat flat performance in its home market and especially in the US, as well as fierce competition in what is now its biggest market, China. Many of those problems were addressed with an aggressive expansion strategy initially inspired by luxury sports car manufacturer Porsche, which had attempted to engineer an unsuccessful reverse takeover of Volkswagen in 2008. The tables were turned after Porsche suffered the full force of collapsing credit markets, forcing it to concede the upper hand in a merger to Volkswagen. That whole experience awakened a far more dynamic and combative spirit within Volkswagen Group itself. Perhaps, in the light of its cheating over diesel emissions, a little too dynamic. Yet despite billions of dollars in fines and costs, the group remains more or less unscathed, still the #1 by volumes - 10.9m vehicles sold in 2018 - and also by total revenues - €235.8bn, with net income of €12.2bn. All were best-ever results. Herbert Diess is group CEO. Though publicly quoted, majority voting control of the group is retained by the Porsche and Piech families.
Capsule checked 1st May 2018
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Adbrands Daily Update 15th Apr 2019: A month after the US SEC filed charges against former Volkswagen Group CEO Martin Winterkorn, its counterpart in Germany has followed suit. Winterkorn and four other former executives have been charged with fraud for their role in the diesel emissions scandal, as well as engaging in unfair competition, embezzlement, tax evasion and giving false witness. If found guilty, Winterkorn would face huge fines and a reclaim for past salary as well as a prison sentence of up to ten years. The four other defendants have not been named by prosecutors on grounds of privacy.
Adbrands Daily Update 15th Mar 2019: Volkswagen has still to draw a line under the repercussions from the "Dieselgate" scandal, which has already cost more than $25bn in fines and costs. In an unexpected development, the US SEC this week filed charges against the group and its former CEO Martin Winterkorn for defrauding investors over its "clean diesel" claims. The suit says that the group raised more than $13bn from US investors in 2014 and 2015 by selling bonds "at inflated prices" despite knowing that more than half a million of its vehicles were already in circulation in serious violation of emissions limits. Volkswagen said it would contest the new new lawsuit.
Adbrands Weekly Update 11th Oct 2018: Automobile companies worldwide suffered a sharp slump in demand during September, partly as a result of tightened regulations on vehicle emissions in Europe. Global giant Volkswagen Group was especially hard-hit. Its main VW brand reported a shock 46% plunge in volumes in Western Europe as well as 11% in its single biggest market, China. It said trade tensions with the US had contributed to the latter fall. All global regions except Latin America reported declines, contributing to an 18% overall slump. Sister brand Audi fared even worse, with a 55% plunge across Western Europe, and 22% worldwide.
Adbrands Weekly Update 14th Jun 2018: Volkswagen received its first penalty in Europe over the Dieselgate emissions-cheating scandal. German regulators fined the group €1bn, one of the largest penalties ever levied in that country. Volkswagen has already paid out around €26bn in fines and compensation to customers, almost entirely so far in the US, but that sum is likely to rise further. An investigation is still underway in Germany for fraud, with several key group executives at risk of large fines or even jail sentences.
Adbrands Weekly Update 10th May 2018: In a dramatic escalation of the investigation into Volkswagen's "Dieselgate" cover-up, the US Justice Department filed charges against former group CEO Martin Winterkorn for conspiracy to commit fraud over vehicle emissions. Volkswagen was found secretly to have installed "cheat devices" on diesel engines which temporarily cut toxic emissions under laboratory conditions. The group has already admitted guilt in the case but placed all the blame on lower-level executives, claiming that senior executives had been unaware of the fraud. Two former managers are already serving multi-year jail sentences. However, the Justice Department says Winterkorn himself knew about the deception more than a year before it was discovered by regulators in August 2015, and endorsed efforts to continue the cover-up.
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