VW’S Diesel­gate bill hits $30b af­ter another charge

The Gulf Today - Business - - Front Page -

HAM­BURG/BER­LIN: 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 VW’S Audi brand.

VW’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.

VW 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”.

VW, 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 euros ($26.7 bil­lion) to cover costs such as fines and ve­hi­cle re­fits.

Last year, VW 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, VW said it was set­ting aside an ad­di­tional 2.5 bil­lion euros ($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 euros per car.

“We have to do more with the hard­ware,” a VW spokesman 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 spokesman added.

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