Volkwagen has left the door open to potential tie-up talks with Fiat Chrysler, as a drop in operating profit at its biggest car brand showed the challenges it still faces 18 months on from its emissions scandal. Sonia Legg reports
18 months on from the emissions scandal and Volkswagen bosses are facing the media and the music. It's not so good for the VW car brand At 1.9 billion euros operating profit has fallen 10 per cent, and profit margins are down to 1.8 percent from 2 percent. It's a different story for the group as a whole. It overtook Japan's Toyota last year to become the world's biggest selling carmaker. Porsche sports cars performed particularly well and Scania trucks saw a turnaround. (SOUNDBITE) (German) VOLKSWAGEN CEO, MATTHIAS MUELLER, SAYING: "2016 was not the horror year for Volkswagen, we had initially expected. We have achieved a great deal. Despite having a lot of work to do, Volkswagen is back on the right track." The VW brand accounted for almost half the group's revenue in 2016 - but only 10 percent of its underlying profit. Some now have doubts the restructuring target of 3.7 billion euros in annual savings by 2020 will be met. But Mueller is confident the US can help, even though legal costs and compensation there could cost $25 billion. (SOUNDBITE) (German) VOLKSWAGEN CEO, MATTHIAS MUELLER, SAYING: "The U.S. remains a strategic core market for the group and also for the VW brand. We stand by our investment and location decisions. The double-digit growth rates in the first two months of this year are encouraging." But competition is about to get tougher in Europe after Peugeot maker PSA agreed to buy GM's Opel business. Fiat Chyrsler's boss Sergio Marchionne thinks the deal might even persuade VW to seek a tie up with his company. Mueller back-tracked on a previous rejection of that suggestion - simply saying "there is no contact at the moment".