Volkswagen's "diesel-gate" costs much bigger than expected
WOLFSBURG, Germany- Volkswagen's diesel emissions scandal will cost the German automaker at least $18.2 billion (16.2 billion euro).
VW said Friday that's the one-time hit the company will take to its 2015 earnings, more than double the 6.7 billion euros it had previously set aside to reflect the cost of the scandal. The announcement came ahead of a news conference at its Wolfsburg headquarters that follows the outlines of a deal with U.S. environmental authorities.
The company said yesterday it had reached a settlement with the Department of Justice to repurchase nearly 500,000 cars in the U.S. that were equipped with software that let the cars cheat on emissions tests.
Volkswagen said will post an after-tax loss of 1.36 billion euros for 2015 and a net loss of 5.5 billion euros. That represents the biggest loss in the company's history.
Volkswagen CEO Matthias Mueller said as he released the headline earnings numbers that the company remains "fundamentally healthy" and that he is "convinced that Volkswagen has what it takes to overcome its challenges."
VW had delayed its earnings announcement until it could get a better estimate of the costs involved. Analysts say the total costs in fines, legal judgments and lost sales will be significantly higher.
Volkswagen also said it will not be able to release results of an internal probe of its emissions scandal this month as expected. The company now says the probe conducted by U.S. law firm Jones Day could be completed by year end.
On advice of the company's attorneys, management and directors, the company said "a disclosure of interim results of the investigation at this point in time would present unacceptable risks for Volkswagen and, therefore, cannot take place now."
The revelation last September from U.S. environmental authorities that VW had been cheating on emissions test rocked one of the most venerable brand names in the auto industry and cost it its chief executive as well as a host of goodwill.
It's also raised questions over the practices of others. Japanese company Mitsubishi Motors and Italy's FIAT alsohave questions to answer.
Still, Germany's car companies appearto be having the most trouble at the moment.
On Friday, Germany's transport minister, Alexander Dobrindt, said five German automakers agreed to recall atotal of 630,000 diesel vehicles in Europe following an investigation into their emissions levels. He identified the companies concerned as Mercedes, Opeland Volkswagen and its subsidiaries Audi and Porsche.
The move followed a probe of 53 models by Germany's Federal Motor Transport Authority that was sparked by revelations last year about Volkswagen's emissions test cheating. VW's cars could tell when they were on the test stand and turned up the emissions controls, then turned them off in real-world driving to improve performance and mileage.
Dobrindt said none of the newly scrutinized models were found to have rigged engine control software devices of the kind used by Volkswagen, but that they displayed elevated levels of nitrogen oxide in both laboratory and real-world tests.
Some models used technology to switch off the vehicles' emissions treatment systems at certain temperatures to protect the engine, he said.