Volkwagen’s latest bad news is a Friday profit warning that sent the company’s share price tumbling. The German carmaker has barely been able to keep up with fixing cars fitted with the notorious software that led to the Dieselgate scandal.
VW said it would need to set aside more money to cover the cost of repairs and settlements in the US, around another €2.5 billion ($2.95 billion). The additional sum brings the total money the company has set aside due to the Dieselgate scandal to €25.1 billion. According to experts, it may rise further, going as high as €35 billion.
The Wolfsburg-based company has been battling regulators, dealers and angry car owners around the world since environmental authorities in California broke news of the systematic cheating in September 2015. Last year VW agreed to fix or buy back cars in the US that it had modified to mislead environmental testing equipment.
As one stockmarket analyst put it, "it makes you wonder whether this is a bottomless pit."
The announcement sent VW shares tumbling by as much as 4 percent, to a low of €132.85. Shares in Porsche, which is Volkswagen’s controlling shareholder, also fell as much as 2.7 percent but recovered to end Friday slightly higher, even while the DAX itself, Germany’s premium share index, rose 0.6 percent.
Most of the 500,000 owners of VW 2-liter diesel cars in the US want to return their cars and the company has several huge parking lots, crammed with vehicles, around the country. The company had reportedly hoped to fix the cars and then resell them to reduce some of its losses, but has not sold as many as hoped. And it now also still lacks the necessary permits to sell more.
Unlike in Europe, where regulators only require it to reprogram on-board software, American authorities require physical changes to vehicle exhaust and filtering systems.
Observers say the announcement is yet another sign that the car company is not out of the woods yet. A stock market analyst told Handelsblatt that no one had expected the profit warning: “It makes you wonder whether this is a bottomless pit.”
And VW’s problems don’t stop with the already herculean emissions woes. Takata, a Japanese maker of airbags, also recently announced a recall. Among the 50 million vehicles affected by the Takata recall worldwide, some are Volkswagens fitted with cheating software.
Before they can be resold, they will not only need revamped emission systems, they also must be refitted with new airbags. Trouble is, the replacements are not available yet. As VW waits, the car company is considering scrapping some of the diesels containing cheating software just because the sheer numbers involved make them less likely to generate much income on the second-hand car market anyway.
Stefan Menzel covers the auto industry for Handelsblatt. To contact the author: firstname.lastname@example.org