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VW takes another $3 billion hit due to diesel scandal
https://www.bloomberg.com/news/articles/2017-09-29/vw-still-choking-on-diesel-as-damages-surge-to-30-billion [bloomberg.com]
More than two years after Volkswagen AG was thrown into chaos by the diesel-emissions scandal, the German auto giant is still choking.
The latest reminder that the crisis is far from over came Friday when Volkswagen announced it will take a charge of 2.5 billion euros ($3 billion) because plans to buy back or retrofit tainted U.S. diesel cars proved more complex than expected. That brings total damages to about $30 billion and raises questions about whether Chief Executive Officer Matthias Mueller has the situation under control.
“This is yet another unexpected and unwelcome announcement from VW, not only from an earnings and cash-flow perspective but also with respect to the credibility of management,” Arndt Ellinghorst, a London-based analyst with Evercore ISI, said in an email. “No surprise, investors are skeptical and cynical.”
To put the latest charge into perspective, it comes a full 15 months after the company reached a settlement with U.S. authorities to buy back or fix around 500,000 tainted vehicles, including Golf, Jetta and Audi A3 models. So after more than a year of working through the issues, Volkswagen suddenly discovered that the plans were technically tougher than anticipated. The complications, which the company didn’t describe in detail, amount to more than 5,000 euros per car.
