Every company runs into unexpected costs, but a surprise $3 billion (yes, billion) hit isn’t something you see every day. That is, unless you happen to be Volkswagen, which is still hemorrhaging greenbacks in spectacular fashion courtesy of the never-ending Dieselgate scandal. Automotive News Europe reports the company will plug the unexpected loss into its third quarter operating results, which Volkswagen will announce on October 27. We don't expect it to be pretty.
According to a statement from Volkswagen, the reason behind the unplanned charge is a “more technically complex and time consuming implementation” of the company’s diesel retrofit and buy-back program in North America. Roughly 11 million cars were recalled around the world for using software to cheat emission regulations, but with the majority of those being in Europe, a $3 billion hit for just a small portion of the cars suggest the automaker’s woes are far from over, at least on the west side of the Atlantic.
That’s not to say things are rosy in Volkswagen’s home country, either. A report from Germany just today says that former Porsche board member and VW engine development chief Wolfgang Hatz has been arrested in connection with the scandal. It’s unclear if or what he might be charged with, but his arrest seems to be related to ongoing investigations of emission cheating at Audi – another automaker under VW’s umbrella that is facing Dieselgate fallout.
Since the scandal first broke two years ago, Dieselgate has cost Volkswagen over $30 billion dollars and has led to the arrest of several mid and high-level VW employees, with some already prosecuted and sentenced to years behind bars. The scandal has also raised questions and sparked investigations into emissions cheating at numerous other automakers, and has all but ruined diesel’s reputation in the passenger car market around the world.
Source: Volkswagen, Automotive News Europe
Volkswagen Group increases Provision for Recall Actions in North America
- Additional provisions to the agreed buy-back/retrofit–program for the 2.0 liter vehicles in North America, due to the more technically complex and time consuming implementation, will burden the Operating Result
- The Volkswagen Group will publish the Interim Report for January-September on 27th of October
The Volkswagen Group today issued an ad-hoc statement to the capital markets as follows:
In the third quarter negative special items of ca. €2.5 billion are expected to burden the Operating Result. The reason is an increase in provisions relating to the buyback/retrofit program for 2,0l TDI vehicles, which is part of the settlements in North America that is proving to be far more technically complex and time consuming.
The complete Interim Report of the Volkswagen Group for the period January-September 2017 will be published on October 27th.