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.
So what happens if affected owners refuse to get the refit that will hurt the performance of their vehicles???
Guess the UAW can quit worrying about that plant in Chattanooga, eh?
So what happens if affected owners refuse to get the refit that will hurt the performance of their vehicles???
I suspect nanny states like California will refuse to allow them to pass inspection or get annual license registration. Normal states will leave it to the owner to decide if he wants to choke down his mpg's and reduce horsepower by half just to be in "compliance".One thing is for sure. This will KILL the resale market for VW's. By January, you should be able to pick up even a good gas powered VW for half of what they're selling for now. Diesels even cheaper.
I would imagine they will be barred from trading in or selling the vehicle until it has the refit.
Of course the refit is going to degrade the vehicles performance so much that the resale value is going to plummet anyway.
So, basically current owners are screwed no matter what.
Are emissions unreasonable? I don't know enough about this to say for sure but I have my suspicions.
Making the employees suffer. The money should come from executive salaries.
The US Government is going to anally rape VW. They took on a calculated risk of fraud, and now they will pay.
There are plenty of US Government agencies and local governments who could use a top-up to their budgets, and plenty of government-sponsored enviro and leftist pressure groups who would love some walking-around money. Moreover, there are politicians, like Eric Schneiderman in NY, who would love to make their name prosecuting VW.
I’m guessing $15 billion, depending on how hard Merkel pushes back.
so upper management purposely deceived everyone and broke the rules but now the employees must sweat massive layoffs??
if I’m a long time worker for VW i lead a revolt to make sure none of these CEO’s or board members get a dime in pension and have ALL the money matched in 401K’s, etc, revoked...
#DieselLivesMatter
The REAL story is that Obama’s CAFE standards are forcing automotive engineers to operate on the outer limits of what is possible.
That and when you demonstrate to the people who regulate you that you are about a thousand times smarter than they are they REALLY get cheesed-off.
Does it really “hurt” the performance of their vehicles? If not, why not just leave the current cars alone and then assess stiff penalties if they don’t comply in the future.
That would be a great bargain.
Our car has to pass an emission test every year to update the registration. So if a VW can pass the test without the refit wouldn't that be OK?
Some states are already seeing this as a bigger payday than the Tobacco settlements.
Communist much? The employees where hired to do a job for which they were paid. I doubt that VW ever promised them lifetime employment.
Current owners will likely get a buyback option or a sum that compensates them for any lost resale value or performance loss as part of the class action. It’s impossible to say how favorable those settlements will be to the owners right now, but it’s entirely possible they will make out on the deal.
I wonder how much the deposed CEO’s golden parachute will be.
you are mixing two separate issues.
volkswagon cheated on test every other car maker has to pass too. they lied to every one of their customers. that is one problem.
the second problem is the epa and the emissions standards and regs, and how even though the car may release more than allowed, given its mpg its still probably cleaner per its efficiency over a gas engine that emits less crap but has poorer mpg. when this isnt factored in its idiotic.
LOL- yes; expecting people to take responsibility for their actions is the core of communism- clown
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