From September 1 2018, all vehicles on sale in Europe must have been tested to the new WLTP emissions regulations. Picture: NEWSPRESS UK
From September 1 2018, all vehicles on sale in Europe must have been tested to the new WLTP emissions regulations. Picture: NEWSPRESS UK

Problems squeezing enough of its cars through the new WLTP emissions test forced Volkswagen to warn shareholders recently not to expect big profit leaps this year.

Though it reported healthy rises in sales, revenues and profits in the first half of the year, Volkswagen Group chairman Herbert Diess warned investors not to expect a second half surge.

He cautioned that up to a quarter of a million cars would suffer production delays, at a cost of billions of euros, because of Volkswagen’s difficulties getting its cars certified on the WLTP test.

The Worldwide Light Duty Vehicles Harmonised Test Procedure (WLTP) is much harder to comply with than the outgoing NEDC test.

Herbert Diess. Picture: REUTERS
Herbert Diess. Picture: REUTERS

Carmakers have to test not just each new model, but each example within a model range, including all different engines, gearboxes, tyre sizes and different combinations of all three.

The WLTP even demands new tests for different air-conditioners, different suspension systems, different brake packages and minor equipment level changes in a chase for more accurate fuel consumption and emissions data for customers. Each test takes about 48 hours and must be conducted at precisely 21° C.

Effective for all new cars sold in Europe from September 1 2018, it is expected to hit carmakers hard across Europe, in particular, with Daimler, the Volkswagen Group, BMW and Renault all admitting not all of their models will be certified in time for the WLTP’s arrival.

A major issue for carmakers is that the entire supply of the continent’s certified test benches is booked solid through to the end of 2019 by brands desperate to get their new cars on sale. Any model, or specification of a model, that hasn’t been certified by September 1 won’t be able to be sold, even if it’s been on sale before that date.

"The Volkswagen Group performed successfully in the first half of the year, with very solid growth in sales revenue and earnings. We also delivered more vehicles than ever before," Diess said.

The Volkswagen Group is one of may carmakers facing sales delays due to the new emissions tests in Europe. Picture: NEWSPRESS UK
The Volkswagen Group is one of may carmakers facing sales delays due to the new emissions tests in Europe. Picture: NEWSPRESS UK

"However, we cannot rest on our laurels because great challenges lie ahead of us in the coming quarters — especially regarding the transition to the new WLTP test procedure.

"Growing protectionism also poses major challenges for the globally integrated automotive industry," he said.

Volkswagen’s WLTP bottleneck isn’t helped by the senior powertrain expertise wiped from the company in the wake of Dieselgate. "Engine development expertise has been lost," Diess admitted.

"That impacts capacity utilisation at our plants, so there will be closure days at our sites during this period," he said.

"One thing is clear, though: this will be a titanic task for the second half of the year, particularly on the margin side."

The carmaker recently hired BMW’s engine development guru (and a former colleague of Diess’s), Markus Duesmann to help with the struggle.

Even with Dieselgate costs ripping €1.6bn out of its bottom line in the first half of the year, the group still delivered 5.5 million vehicles, rising 7.1% on 2017’s first half.

"Over the coming months, we will do everything in our power to validate the trust of our customers worldwide," Diess insisted. "Our stated goal is to transform Volkswagen into our industry’s leading company in terms of profitability, innovative power, sustainability and customer satisfaction."

The company’s sales rose to €119.4bn, with a billion euro rise in operating profit to €9.8bn.

"The first half of the year showed that the group has a solid operating and financial base," Volkswagen Group finance and IT board member Frank Witter said.

"However, as communicated several times before, we need to prepare a volatile second half of the year, particularly due to the WLTP," he said.

"We are working at high pressure on further measures to keep the effects on our production as low as possible," Witter concluded.

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