VW's dieselgate bill hits $30 billion after another
charge
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 [September 29, 2017]
By Jan Schwartz and Victoria Bryan
HAMBURG/BERLIN (Reuters) - Volkswagen is
taking another $3 billion charge to fix diesel engines in the United
States, lifting the total bill for its emissions test cheating scandal
to around $30 billion.
Shares in the German carmaker fell as much as 3 percent on Friday, as
traders and analysts expressed dismay the company was still booking
charges two years after the scandal broke.
"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," said Evercore ISI analyst Arndt
Ellinghorst.
Europe's biggest automaker admitted in September 2015 it had used
illegal software to cheat U.S. diesel emissions tests, sparking the
biggest business crisis in its 80 year history. Before Friday, it had
set aside 22.6 billion euros ($26.7 billion) to cover costs such as
fines and vehicle refits.
On Friday, it said hardware fixes were proving tougher than expected, as
it booked an additional 2.5 billion euro provision.
"We have to do more with the hardware," a VW spokesman said, adding U.S.
customers were having to wait longer for their cars to be repaired.
The news relates to the program to buy back or fix up to 475,000 2 liter
diesel cars.
In Europe, where only a software update is required for the 8.5 million
affected cars, besides a minor component integration for about 3 million
of those, fixes are running smoothly, the spokesman added.
The additional provision will be reflected in third-quarter results due
on Oct. 27, VW said.
Ellinghorst, who has an "outperform" rating on VW shares, expects the
company to report third-quarter group earnings before tax and interest
of 4.04 billion euros.
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A Volkswagen logo is pictured at Volkswagen's headquarters in
Wolfsburg, Germany, April 22, 2016. REUTERS/Hannibal Hanschke/File
Photo
"You have to ask if this is a bottomless pit," said one Frankfurt-based trader
of the U.S. charges.
At 1040 GMT, VW shares were down 1.8 percent at 135.85 euros. They fell as low
as 86.36 euros in the immediate aftermath of the cheating revelations, and are
still trading below pre-scandal levels at over 160 euros.
Asked why VW did not see the problem sooner, the spokesman said it had made
provisions based on what it expected at the time.
"It has now become clear that we need to do more," he said.
VW said in September 2015 that around 11 million vehicles worldwide could be
fitted with software capable of cheating emissions tests.
Porsche SE, which owns a 30.8 percent stake in VW, said the new provision would
also affect its results, but stuck to the wide range for its expected 2017
post-tax profit of 2.1-3.1 billion euros.
Munich prosecutors have arrested a former board member of Porsche in connection
with the emissions scandal at VW's premium brand Audi <NSUG.DE>, a person
familiar with the matter said on Thursday.
Audi admitted in November 2015, two months after parent VW's emissions scandal
broke, that its 3.0 litre V6 diesel engines were fitted with an auxiliary
control device deemed illegal in the United States.
(Reporting by Jan Schwartz; Additional reporting by Hakan Ersen; Writing by
Victoria Bryan; Editing by Georgina Prodhan and Mark Potter)
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