Extra €2.5bn for car buybacks puts brakes on VW recovery

VOLKSWAGEN has said it will be hit by a €2.5bn (£2.2bn) charge because its plans to repurchase and retrofit cars affected by the “dieselgate” scandal have proved more difficult than expected.

The car giant said the buyback programme in North America “is proving to be far more technically complex and time consuming” than thought and will require increased provisions.

The surprise charge in the car maker’s third quarter means the total damages to Volkswagen from the scandal now amount to more than €25bn. Volkswagen last year reached one of the largest ever consumer settlements, in which it said it would offer buybacks or retrofits to owners of around 500,000 vehicles affected in the scandal.

The deal, which was agreed in June and signed off by US courts in October, saw Volkswagen agree to pay around $15bn (£11.2bn) to settle claims and invest in zero-emission vehicles.

Most of the costs from the scandal have come from the US, where the company admitted to using “defeat devices” that allowed cars to cheat in emissions tests. Volkswagen says it has not broken any laws in the EU.

The company appeared to have turned the corner when it said that first-half profits had risen €4.1bn to €9bn. But the latest charge is set to eat into around half of the €4.45bn expected earnings for its third quarter.