Newspaper article Charleston Gazette Mail

Despite Scandal, Sales Booming at Volkswagen

Newspaper article Charleston Gazette Mail

Despite Scandal, Sales Booming at Volkswagen

Article excerpt

FRANKFURT, Germany - It's ironic: Volkswagen spent 2016 battling a huge scandal over cars it rigged to cheat on emissions tests. And now stands a decent chance to pass Toyota for the title of world's biggest carmaker for the year.

Booming business in China helped Volkswagen increase its sales to 10.31 million vehicles last year across all its brands, which include Audi, Porsche and Skoda, the company said Tuesday.

That was an increase of 3.8 percent over 2015, when Volkswagen came in second to Toyota. And a strong finish to the year in December - 11.8 percent better than the same month the year before - improves the company's chances of moving from No. 2 to No. 1 in global sales.

That Volkswagen is even in the running for top spot seems remarkable considering how terrible the year was on the legal and image fronts.

The company, based in Wolfsburg, Germany, said Tuesday it was in advanced talks on a draft settlement with the U.S. Justice Department and U.S. Customs and Border Protection under which it would pay $4.3 billion in criminal and civil penalties in the emissions scandal.

That sum would come on top of a $15 billion civil settlement with U.S. environmental authorities and owners of 500,000 cars. Volkswagen also faces investor lawsuits and criminal probes in Germany. Volkswagen has admitted to equipping diesel cars with software that turned emission controls on when the vehicle was being tested and off during daily driving.

The scandal news kept coming this week as Oliver Schmidt, Volkswagen's former head of U.S. environmental compliance, was arrested in Florida and appeared in a Detroit court in prison garb and shackles. Engineer James Liang had earlier pleaded guilty and offered to assist federal law enforcement in their investigation.

Despite all that, huge demand in China may be enough to push Volkswagen past its Japanese rival and Detroit-based General Motors. Neither rival has reported 2016 sales yet. For 2015, Toyota Motor Co. came in first with 10.15 million, Volkswagen was second with 9.93 million, and GM third with 9.8 million.

Volkswagen's improved sales show how crucial China has become for Germany's carmakers, including BMW and Daimler. Of the three, Volkswagen is the most dependent on the Middle Kingdom. It sold 3.98 million cars there last year, more than a third of its total unit sales.

Volkswagen was barely behind Toyota after 11 months of 2016, but China in particular fueled the strong December. U.S. sales, which are much smaller, were off 2.6 percent for the year.

To add a layer of irony, overtaking Toyota would come only after Volkswagen abandoned its goal of achieving global supremacy in raw sales numbers.

Dethroning Toyota was part of the company's Strategy 2018 pushed by CEO Martin Winterkorn, who lost his job due to the scandal. But the new CEO, Matthias Mueller, has dropped that emphasis on unit sales in the latest strategy, amid concerns it fostered a management culture that could have helped create the emissions scandal. …

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