VW Begins To Hurt – Financially

VW Golf TDI clean diesel

VW Golf TDI clean diesel

This Dieselgate thing is just beginning. We know they cheated. We know they need to fix the problem. We know they can’t sell the 2016 diesels. We know this is going to cost them a lot of money but the real question is How Much? Apparently a lot! So far they’re behind about $6.7 billion euro. One year ago, VW earned 3.23 billion euro for the quarter, but this year they lost lost 3.48 billion euro the quarter. That’s a pretty big swing. And we still have the massive costs of repairing the vehicles(i’m doubtful its all in the special charge) plus the enormous fine expected from the EPA.

I haven’t looked at the accounting but I bet the 6.5 billion euros it reserved for the special costs(Dieselgate) is entirely responsible for the loss as they would have reserved the costs in the same quarter. The question is whether the 6.5 billion euro spent this past quarter is all that is expected for special costs in the future? Normally you estimate the total cost and reserve the entire amount of expected future costs.

According to Autonews, “VW is bracing for costs that analysts have estimated could total from 20 billion euros to as much as 78 billion euros.” Dieselgate is just beginning and it looks like this is going to have a serious financial effect on VW. Cheating never works…