Volkswagen emissions scandal sees car firm make £2.5bn loss

Volkswagen has posted a third-quarter loss of 3.5 billion euros (£2.5 billion) due to the cost of the diesel emissions scandal.

The German car maker announced that it has set aside 6.7 billion euros (£4.8 billion) to deal with the controversy over its installation of software designed to cheat emissions tests.

This is 200 million euros (£144 million) more than the figure given by the Wolfsburg-based firm when the news broke last month.

The third-quarter results show the group would have made a profit of 3.2 billion euros (£2.3 billion) if the "diesel issue" had not emerged.

VW admitted installing defeat device software in 11 million vehicles worldwide, including almost 1.2 million in the UK.

The company has launched an investigation and appointed a new chief executive and chairman in the wake of the scandal.

Chief executive Matthias Muller said: "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.

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

VW shares were up 2.7% in early trading in response to the results.

The firm said defeat devices were installed in vehicles with the EA 189 engine. The sophisticated software conned US emissions testers into believing the vehicles met environmental standards.

The Environmental Protection Agency said 482,000 of the car maker's 2009-15 models in the US were fitted with the software, which switched engines to a cleaner mode when they were undergoing official testing.

In the UK, VW is preparing to recall and "correct" almost 1.2 million vehicles. These consist of around 508,000 Volkswagen cars, 390,000 Audis, 132,000 Skodas, 80,000 VW commercial vehicles and 77,000 Seats.

Volkswagen UK managing director Paul Willis said the firm has started writing letters to those customers.

Motorists have not been told when their vehicles will be recalled, although VW bosses said the process is expected to begin in the new year.