Posted on 10/06/2015 10:44:28 AM PDT by Timber Rattler
Volkswagen will have to make massive savings to cope with the huge cost of its emissions cheating scandal.
That was the stark message delivered to more than 20,000 Volkswagen employees by the group's new chief executive, Matthias Mueller, at a meeting in Germany on Tuesday.
A former Porsche chief, Mueller took over as CEO of the giant automaker after Martin Winterkorn stood down when it became clear the group had cheated emissions tests on as many as 11 million diesel vehicles worldwide.
Mueller said Volkswagen would survive, but warned the road to recovery would be painful.
"We must make massive savings to manage the consequences of this crisis," he told staff.
The group is racing to design a technical fix for the vehicles, which are spread across four brands -- VW, Audi, Skoda and SEAT -- and many model variants and markets. Some will need a software upgrade, others new hardware.
Volkswagen has set aside 6.5 billion euros ($7.3 billion). But the final bill is likely to be several times that amount due to the cost of recalls, legal action by authorities, customers, dealers and shareholders, and the impact of lost business.
"While the technical solutions to these problems are imminent, it is not possible to quantify the commercial and financial implications at present," Mueller said.
As a result, the company will intensify its "efficiency program" and cancel, or postpone, any investments deemed not absolutely essential to its future.
Credit Suisse said last week that Volkswagen may face costs totaling 78 billion euros ($87 billion) in a worst case scenario. Even the bank's most cautious estimate -- 23 billion euros -- is much higher than Volkswagen's current provision.
Mueller made no mention of job cuts on Tuesday but it's hard to see how the company can avoid them. Volkswagen employs about 600,000 people around the world, more than a third of them in Germany.
Volkswagen said it would present a technical solution to regulators for approval shortly and inform affected customers in the coming days that their vehicles need a refit.
The EU is also likely to go after VW because of violation of EU environmental regulations.
I don’t know what the truth is on this issue. I heard that
VW uses different software for different countries because of accepted requirements and the US accused them of using a cheating software by using the wrong software that was actually meant for a different country. Also, it just so happened that the cars blown up in China were VW.
That would be awesome!
I crack myself up sometimes.
I’ll bet you can get a good deal on a Jetta TDI right now.....
rear view cam spying on cars behind them......
I purchased a Beetle 2 weeks before all this happened :-(
Just going to have the recall done and then retune it. Just a software tweak. As a matter of fact, since I’m going to have to get a device to reprogram the ECU anyway might as well jack up the HP quite a bit more.
Love the car. 40mpg, screeches the tires nicely, cruise at 105 MPH all day and, importantly, carries my upright bass.
Plus the wife likes it.
FUCARB
“I wonder how much the deposed CEO’s golden parachute will be.”
I read somewhere that he was “deposed” from the Volkswagen Auto Group, but that he still holds a major position within the overall very complicated ownership and control setup.
VW and Porsche went back and forth for several years, about who was going to buy the other out.
Seems like a simple fix to me. Pull out the diesel engine and drop in a gasoline one. Reprogram the computer, and have folks back out on the road in a couple of hours.
Right now there is a 1-800 type law ad on the radio for VW owners “who might be due compensation”. They’re already coming out from under the rocks....
One would think they’d be hiring more to do the refits.
More to a conservative county. That test is only required in liberal El Paso, Travis and Williamson counties and the DFW and Houston/Galveston areas.
Because fixing them will reduce global climate interferece....or something.
i think it speaks volumes their CEO’s around the world stepped down within days (even hours) as did other high level executives once the story broke..evidently its spread further than just VW...
if they did nothing wrong then they should stand and fight...
Given that people who don’t get the change will be knowingly defrauding DOT if their car goes through emissions testing, bad things will happen to owners that refuse.
Meanwhile I’m wondering if VW can survive this. Between the fines, the costs, and the seriously damaged reputation, this could put them into the “remember when” pile.
EPA plans to add a "road test" to the lab test in the future to catch "cheating".
Volkswagen should just run out obamas time until Donald Trump takes office. Ignore any fines.
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