VW takes almost $3B extra charge for fixing scandal-tainted United States diesels

30 September, 2017, 15:50 | Author: Barbara Daniel
  • Audi Electric Cars To Be Built Around The World

Munich prosecutors arrested a former board member of Porsche in connection with the emissions scandal at Audi, a source said on Thursday.

Volkswagen's USA division on Friday introduced a new six-year/72,000-mile warranty on most new VW vehicles sold in the United States. The software was installed on 2-liter diesel engine VW cars and 3-liter diesel Audi, Porsche, and larger VW vehicles.

The additional provisions will hit operating results in its third-quarter report, due October 27, the Wolfsburg, Germany-based company said Friday in a statement.

German auto maker Volkswagen will pay an additional €2.5 billion ($3 billion) fine for installing emissions cheating software in its diesel vehicles.

The diesel cars in the USA affected by scandal only represent a small part of the 11 million rigged cars globally.

Four months later, the U.S. Justice Department said it had charged a former Audi manager with directing employees at the company to design software to cheat U.S. emissions tests in thousands of Audi diesel cars.

The total cost to the company from the scandal is now near $30 billion.

Being the head engine developer for Audi up until 2007 places a lot of blame on Hatz, with Audi admitting in 2015 that its 3.0-litre turbo-diesel V6 had been fitted with illegal software to cheat its way through emissions tests. The fix is taking longer and some cars had to be worked on a few times.

While it's likely that VW is hoping for some good press after the diesel cheating scandal of two years ago, company headquarters in Germany issued a terse, two-sentence press release Friday announcing that the company will take a third-quarter charge of €2.5 billion ($2.9 billion) to boost its provision for North American buyback/retrofit programs related to the diesel scandal. Net liquidity was EUR23.7 billion at the end of June, down 17.5% from a year earlier.

The new charge comes 15 months after Volkswagen and USA regulators and law enforcement agencies agreed on a program by which the company agreed to buy back or fix about 50,000 Volkswagen and Audi models.

"Volkswagen remains very liquid in terms of its financial position and the risk of a capital increase is low", said Metzler's Pieper.

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