VW’s Audi Unit Cuts Earnings Outlook as Scandal Costs Rise

  • Manufacturer sees additional spending of 620 million euros
  • Profit margin to fall considerably below target corridor

Volkswagen AG’s Audi premium-car unit, the German automaker’s biggest profit contributor, cut its earnings outlook and expects substantial additional costs triggered by the diesel-emissions manipulation scandal.

Audi anticipates an additional hit of 620 million euros ($676 million) in the third quarter, the Ingolstadt, Germany-based unit said in a statement. It’s now forecasting that the full-year operating return on sales will be “considerably below” a target corridor of 8 to 10 percent, rather than missing that range slightly. Excluding special items the margin is anticipated to reach the target corridor.

Volkswagen has made some progress in resolving the scandal involving software that enabled diesel cars to cheat on emissions tests following U.S. court settlement this week, though it still faces potential criminal charges and lawsuits. Audi said Thursday that its extra costs also stem from recalls to fix cars equipped with faulty air bags from supplier Takata Corp. Volkswagen is scheduled to release third-quarter earnings figures later today.

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