Saturday 24th June, 2017
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Latest VW bill for emissions scandal unlikely to top 20bn euros

Latest VW bill for emissions scandal unlikely to top 20bn euros

A settlement with the U.S. authorities over emissions test cheating will push up the cost for Volkswagen, but the bill is likely to remain below 20 billion euros ($21 billion), a source familiar with the matter said on Wednesday.

Europe’s biggest carmaker has said it is in advanced talks with the Justice Department over a $4.3 billion settlement, adding that meant it would exceed cur­rent provisions set aside to cover the costs of the scandal.

Volkswagen (VW) has al­ready announced 18.2 billion eu­ros ($19.1 billion) of provisions to cover the costs of “Dieselgate,” of which 16.2 billion euros were booked in 2015.

“We are counting on a sum of 16 billion plus X. The X is likely to be in the 2 to 4 billion range,” the source said, speaking on con­dition of anonymity.

The German company’s su­pervisory board was meeting on Wednesday to approve the draft deal with the Justice Department, which would be a major milestone in its attempts to recover from the biggest business scandal in its 80-year history.

VW shares rose as much as 4 percent in early trade to their highest since the scandal broke in September 2015.

The company’s acceptance of the settlement agreement and its plan to plead guilty to criminal misconduct will be announced later Wednesday in Washington by the Justice Department and environmental regulators, peo­ple briefed on the matter said.

However, the 16-month saga could still have further to run, with U.S. authorities investigat­ing who was individually respon­sible for the cheating and VW fac­ing probes and lawsuits in Europe and elsewhere.

“This is a partial victory, but VW is by no means out of the woods yet,” said Ingo Speich, a fund manager at Union Invest­ment which holds about 0.6 per­cent of VW preference shares. “There are still considerable liti­gation risks.”