Volkswagen’s dieselgate bill hits $30 bn
Volkswagen is taking another $3 billion charge to fix diesel engines in the United States, lifting the total bill for its emissions-test cheating scandal to around $30 billion.
The German group is struggling to put the two-year-old “Dieselgate” scandal behind it, and working to transform itself into a maker of mass-market electric cars.
On Thursday, Munich prosecutors said they had arrested a former Porsche management board member, the first top executive within the group to be detained amid a widening probe into cheating at Volkswagen’s Audi brand.
Volkswagen’s growing financial woes and Wolfgang Hatz’s arrest were also discussed on Friday at a regular meeting of the carmaker’s supervisory board, one person familiar with the matter said.
Volkswagen’s shares fell as much as 3 per cent on Friday, as traders and analysts expressed dismay that the company was still booking charges for “Dieselgate”.
Evercore ISI analyst Arndt Ellinghorst said the news was unexpected and unwelcome, “not only from an earnings and cash flow perspective but also with respect to the credibility of management”.
Volkswagen, Europe’s biggest automaker, admitted in September 2015 that it had used illegal software to cheat US diesel emissions tests, sparking the biggest business crisis in its 80-year history. Before Friday, it had set aside ^22.6 billion ($26.7 billion) to cover costs such as fines and vehicle refits.
Last year, Volkswagen agreed with US authorities to spend up to $15.3 billion to buy back or fix up to 475,000 2.0-litre polluting diesel cars.
On Friday, Volkswagen said it was setting aside an additional ^2.5 billion ($3.0 billion) as hardware fixes for the models were proving tougher than expected and would take significantly longer. Ellinghorst said the complications would amount to ^5,200 per car.
“We have to do more with the hardware,” a Volkswagen spokesperson said.
In Europe, where only a software update is required for the 8.5 million affected cars, plus a minor component integration for about 3.7 million 1.6-litre vehicles included in that number, fixes are running smoothly, the spokesperson added.
The additional provision will be reflected in third-quarter results due on October 27, Volkswagen said.