Volkswagen posts first quarterly loss in 15 years after putting aside £4.8bn to cope with emissions test rigging scandal

• Carmaker announced £2.5billion loss in the third quarter
• Drop in global sales following emissions scandal puts VW behind Toyota
• €6.7billion set aside to recall models fitted with emissions defeat devices
• Manufacturer to make €1billion cutbacks on research and development 

Volkswagen announced a quarterly loss of £2.5billion on Wednesday in the wake of the emissions test cheating scandal revealed in September.

It is the first quarterly loss made by the German carmaker in 15 years, it confirmed.

The drop is the result of the manufacturer setting aside €6.7billion (£4.8billion) in the July to September period to cover cost of recalling the 11million cars worldwide fitted with emissions defeat devices - a figure that has slightly risen from the €6.5billion announced a week after the scandal first emerged.

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Feeling the impact: The £4.8billion set aside to fund the recall of 11 million cars worldwide fitted with emissions cheating software has seen VW make a quarterly loss for the first time in at least 15 years

As a result, the German group said it now expected its operating profit to drop 'significantly below' last year's record €12.7billion (£9.2billion).

Excluding costs of the scandal, the carmaker still expects its group operating margin to come in between 5.5 and 6.5 per cent this year, after 6.3 per cent in 2014.

Volkswagen plans to cut investments by €1billion a year at its core division, mainly in the research and development departments. 

Luxury division Audi, source of about 40 per cent of VW group profit, will also cut planned spending.

Volkswagen confirmed the loss was the first of its kind in at least 15 years but, due to accounting changes, was unable to say precisely when the last loss occurred.

VW may need to set aside more money for measures to stabilise sales if deliveries take a hit from the scandal as many have predicted, Chief Executive Matthias Mueller said.

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Chief Executive Matthias Mueller (right) said VW will do everything in its power to win back trust.

Steps could include discounts on new cars if owners turn in old models as well as cheap loans and incentives to dealers to buy back older cars. 

'The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear,' Mueller said in the announcement.

'We will do everything in our power to win back the trust we have lost.' 

Group deliveries, which also include premium brands Audi and Porsche, slid 1.5 per cent in September to 885,300 cars and fell 3.4 per cent in the third quarter to 2.39 million cars, causing VW to drop behind Japanese rival Toyota in nine-month global auto sales charts after clinching the top spot just three months earlier. 

Despite the loss, Volkswagen shares rose 3.2 per cent following the results announcement, making it the best performing stock on the German Dax 30 index in the first hour of trade.