Global trade tensions have put carmakers under pressure. But Volkswagen claims that the biggest threat to its business is the new emissions tests in Europe.
“We can’t rest on our laurels as we face major challenges in the coming quarters – especially in terms of transitioning to a new… test procedure,” CEO Herbert Diess he said in a statement on Wednesday.
The tests represent a “titanic task” and “the biggest [sales] volume and profitability risk,” the CEO said, according to a presentation prepared for reporters. Diess warned that factories may be temporarily closed and some new models may be delayed.
Volkswagen ( he is not alone. Other carmakers in Europe are scrambling to prepare for the tests, which were introduced at the end of 2017. Industry groups have reported that testing bottlenecks are causing certification delays. )
The new test, called the Worldwide Harmonized Light Vehicle Test Procedure (WLTP), measures fuel consumption and CO2 and pollutant emissions under conditions that simulate real-world driving scenarios.
It is billed as a significant improvement over a previous test that was designed in the 1980s and failed to detect it Volkswagen manipulates diesel engine emissions.
The new tests are done in independent labs and it can take days to set up a single exam. Test facilities run at 100% capacity and operate 24 hours a day, but this is not enough to avoid delays, according to the European Automobile Manufacturers Association.
“Neither the manufacturers nor the approval authorities had enough time to prepare adequately,” the association said in a statement. “The process of obtaining the consent of the European Union has slowed down, resulting in the planned [car] production is halted or delayed.”
All new car models sold in the 28 member states of the European Union must be certified by September. Even after regulators approve a model, vehicles may be randomly tested as they roll off the factory floor.
Automotive manufacturing is already suffering.
The British Society of Motor Manufacturers and Traders announced this week that domestic car production for the UK market fell by 47% in June. It said new emissions tests are contributing to the slowdown.
Mike Hawes, chief executive of the industry group, said the tests were one factor contributing to a “perfect storm” for carmakers, who are also worried about the effects of Brexit.
Volkswagen said on Wednesday it delivered 5.5 million vehicles in the first half of 2018, up 7% from a year earlier.
Revenue rose 3.5% to €119.4 billion ($139.5 billion) and operating profit rose nearly 10% to €9.8 billion ($11.5 billion). The company took a €1.6 billion ($1.9 billion) charge in connection with it. diesel scandal.
Volkswagen warned that its financial results could be volatile in the second half of the year due to emissions tests. The automaker’s shares fell 3%.
CNNMoney (London) First published August 1, 2018: 9:38 am ET