According to Credit Suisse's estimations, the entire EA189 diesel engine software debacle could cost the Volkswagen Group as much as €78 billion.

According to Credit Suisse's estimations, the entire EA189 diesel engine software debacle could cost the Volkswagen Group as much as €78 billion.

This is obviously a worst case scenario and would represent a massive blow for the German automotive conglomerate that has set aside for now "just" €6.5 billion to deal with the issue which involves recalling almost 11 million cars equipped with the EA189 1.2 TDI, 1.6 TDI and 2.0 TDI engines. In Volkswagen's vision, the amount of money should also be enough to pay the upcoming fines although it's very possible they will have to gain access to additional funds to face the penalties.

In reality, the problem is actually much bigger than this as there are thousands of remaining Euro 5 cars blocked at dealers and also this huge scandal will certainly have a negative impact on Volkswagen's image and many people will decide to go for another marque out of the VAG empire.

Credit Suisse's most conservative estimate of the cost stands at around €23 billion which still is about 3.5 times more than Volkswagen's allocated funds for the Dieselgate. Hypothetically speaking, if the worst case scenario will actually happen, €78 billion would represent about seven times VAG's last year net profit.

There's also the issue of Volkswagen Financial Services which according to Credit Suisse is already having problems because they have to borrow more money than before in order to lend it to customers. CS says the VW's financial arm might need a cash injection from the group in the near future to maintain the business in good shape.

 

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