Dieselgate could bleed Volkswagen dry
Financial analysis predicts Volkswagen will lose hundreds of billions of dollarsAs the local Volkswagen and Audi divisions suspended sales of vehicles affected by Dieselgate in Australia over the weekend, the global cost of the scandal is mounting.
The Volkswagen Group has earmarked €6.5 billion, or around $A10 billion, to cover the cost of the fines, recalls and fixes resulting from the emissions-cheating software. But that may only be a drop in the ocean compared to the overall costs the company may face.
Zurich-based financial giant Credit Suisse estimates the total cost of Volkswagen's decision to try and mislead emissions testing authorities could rise to €78 billion ($A124b).
That's the worst possible situation, according to the Credit Suisse report which was distributed to clients of the financial institution.
The best-case scenario, says Credit Suisse, is predicted at around €23 billion ($A36.5 billion), some three times higher than the VW Group's current €6.5 billion kitty.
Lump in the more than €27 billion loss from Volkswagen's share price dropping by more than a third since the scandal broke in mid-September, and the German auto-maker faces a grim short to mid-term financial outlook.
According to a report by CNN Money, Volkswagen representatives say these dire fiscal forecasts are "nonsense".
"The numbers ... are pure speculation," Volkswagen stated through a spokesperson.
In total Volkswagen will be required to recall around 11 million vehicles that featured special 'defeat device' software allowing them to cheat emissions tests, fitted with a range of four-cylinder diesel engines codenamed EA189.
The TDI engines range in capacity from 1.2 to 1.6 and 2.0 litres, and have been fitted to Volkswagen, Skoda, Audi and SEAT cars.
Meanwhile, Audi's German arm has launched a website allowing owners to see if their diesel vehicle is affected by the emissions debacle and whether it will be recalled.
It's yet to be seen if Audi Australia or other national distributors for the German luxury brand will offer a similar service to give customers more transparency.
In the USA, Volkswagen Group of America CEO Michael Horn will be interrogated by a US House of Representatives' Subcommittee on October 8.
The subcommittee's chair Republican, Tim Murphy, released a statement saying: "There are serious issues raised by reports that Volkswagen installed so-called 'defeat-devices' in some of their diesel vehicles to circumvent decades old rules in place to protect public health.
"The American people want to know why these devices were in place, how the decision was made to install them, and how they went undetected for so long."
The world will be watching how US politicians tackle the scandal as Horn – and Volkswagen – faces extreme scrutiny.
Dieselgate related reading:
Huge recall planned, other brands hit
Audis affected top two million
ACCC issues statement on VW emissions saga
Müller locked in as Volkswagen CEO
BMW forced to deny emissions rigging
Volkswagen boss Winterkorn to go as crisis spreads
Dieselgate worsens, 11m vehicles could be affected
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