FILE - In this Friday, April 13, 2018 file photo, Volkswagen logo is pictured in front of a company building in Wolfsburg, Germany. German carmaker Volkswagen reports second-quarter earnings on Wednesday Aug 1, 2018. (AP Photo/Michael Sohn, File)

Volkswagen sees profit rise but warns on trade disputes

August 01, 2018 - 6:09 am

FRANKFURT, Germany (AP) — Volkswagen said its earnings rose in the second quarter on record sales and fatter profit margins, but warned that "growing protectionism" is a threat to the globally connected car industry.

The automaker based in Wolfsburg, Germany, said Wednesday that profit increased 6.8 percent to 3.31 billion ($3.85 billion) euros, despite a charge of 1.6 billion euros for the company's lingering diesel emissions scandal.

Revenues rose 3.4 percent to 61.14 billion euros and the operating profit margin rose to 9.1 percent from 7.7 percent.

CEO Herbert Diess said that the company "cannot rest on its laurels" due to coming challenges such as new, tougher emissions certification for vehicles. Automakers are facing bottlenecks in testing and approval under the new European emissions standards, which require testing the cars in real driving conditions.

In September 2015 U.S. authorities caught Volkswagen using software that turned emission controls on during stand testing, and off during real driving. Since then, the company has had to set aside 27.4 billion euros to cover fines, penalties and other costs. The CEO of the luxury division Audi, Rupert Stadler, was jailed June 18 at the initiative of prosecutors in Munich, who are investigating possible fraud and illegal advertising in connection with suspected emissions manipulation. Diess said at a news conference related to the earnings report that "we hope public prosecutors will be able to swiftly investigate this matter."

In the wake of the diesel scandal, it became clear other automakers' cars also emitted more pollution during real driving than reflected in the tests. That could result from loopholes that permitted manufacturers to turn down emissions controls in cold weather to avoid engine damage.

Diess meanwhile warned that "growing protectionism also poses major challenges for the globally integrated automotive industry." U.S. President Donald Trump has imposed new tariffs on steel, aluminum and Chinese goods. The Chinese retaliated with tariffs on autos from the U.S. Trump had threatened to impose tariffs on imported European cars but held off after talks with European Commission President Jean-Claude Juncker.

Volkswagen reported record sales volumes for the first six months of the year of 5.5 million vehicles, an increase of 7.1 percent. Last year, it contested the title of largest carmaker with the Renault-Nissan-Mitsubishi alliance by logging 10.7 million in unit sales. Renault-Nissan-Mitsubishi had 10.6 million but its top executive said that Volkswagen achieved the edge by counting trucks.

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