The running cost of Volkswagen's Dieselgate scandal is now up to £22bn.
Every company runs into unexpected costs, but a surprise £2.4bn hit isn’t something you see every day. That is, unless you happen to be Volkswagen, which is still hemorrhaging money in spectacular fashion courtesy of the never-ending Dieselgate scandal. According to the latest reports the company will plug the unexpected loss into its third quarter operating results, which Volkswagen will announce on 27 October 27.
According to a VW statement, 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 11m cars are being recalled around the world for using software to cheat emission regulations, but with the majority of those being in Europe, a £2.4bn 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 – German police arrested a former Porsche board member and Volkswagen engine head in connection with the scandal. Wolfgang Hatz has been detained in relation to the ongoing investigations of emissions cheating at Audi, another car manufacturer under the VW umbrella facing Dieselgate fallout.
Since the scandal first broke two years ago, Dieselgate has cost Volkswagen more than £22bn and has led to the arrest of several mid and high-level VW employees, with one facing 40 months in jail and others awaiting sentencing. The scandal has also raised questions and sparked investigations into emissions cheating at numerous other manufacturers and has all but ruined diesel’s long-term reputation in the passenger car market around the world.
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.