Contingency model

For the first time in 15 years, the Volkswagen Group recorded a quarterly loss, as per the article below. Construct and explain a contingency model with no more than five variables explaining how Volkswagen came to experience this first quarterly loss in more than a decade. Remember to be clear in your explanation, and ensure your model aligns to your explanation.

Article

Volkswagen posted its first quarterly loss in at least 15 years on Wednesday, hit by a 6.7 billion euros (5 billion pounds) charge to cover the cost of rigging diesel emissions tests, and said the final bill was likely to be higher.

As a result, the German carmaker said it expected its 2015 operating profit would drop "significantly below" last year's record 12.7 billion euros, even though its auto sales are seen matching last year's record 10.14 million deliveries.

The news came as the company's new CEO was about to fly to China with German Chancellor Angela Merkel and other business leaders to promote trade in a major export market and try to limit the damage of a scandal that has rocked the auto industry.
Almost six weeks after it admitted using illegal software to falsify U.S. diesel emissions tests, Europe's biggest carmaker is under pressure to identify those responsible, fix up to 11 million affected vehicles and convince regulators, investors and customers it can be trusted again.

The biggest business crisis in its 78-year history has wiped more than a quarter off VW's stock market value, forced out its long-time chief executive and tarnished a business held up for generations as a model of German engineering prowess.

New VW finance chief Frank Witter said on Wednesday the cost of the scandal would be "enormous, but manageable" and the firm intended to get taxpayers help for the 6.7-billion- euro provision to cover initial costs, such as for vehicle refits."When it comes to fines and penalties the situation is probably very different," Witter told a conference call. "But for those items we provisioned for today it is very legitimate and right to have them tax-deductible." VW also said it had hired consultants Deloitte to support an investigation into the scandal by U.S. law firm Jones Day, with new CEO Matthias Mueller saying those responsible would face tough consequences.

Mueller added VW would focus more on profitability than sales volumes in future. His predecessor, Martin Winterkorn, set VW the goal of becoming the world's biggest carmaker by sales volumes, and critics have said this may have inadvertently led to the use of software that disguised the level of real toxic emissions in VW's diesel engines.
Though Mueller has promised far reaching change, some analysts and investors have questioned whether the company veteran is the right man to lead the overhaul, which they say needs greater openness from the family, local government and trade union interests that control the carmaker. "That Volkswagen now finds itself in this current situation is something that some might say is not so surprising," said Yngve Slyngstad, the CEO of Norway's wealth fund which owns a stake in VW and has been a critic of its corporate governance. He added it was too early to say whether the steps taken by VW's new leadership were enough, as his fund posted a quarterly loss on its investments in part due to the plunge in VW shares

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