The recent diesel engine emissions scandal affecting Volkswagen AG is expected to have a huge impact on the company’s financial standings. As a direct result of that, the company has announced that all non-essential investments will be cancelled or postponed.
This comes CEO Mr. Matthias Müller announced that the company is working on a technical fix to correct the exhaust emissions of over 11 million diesel-powered Volkswagen and Audi vehicles, which was found to have been fitted with an illegal engine management software that selectively disables the vehicle’s exhaust emissions control function.
For a majority of the vehicles affected, a software fix is sufficient but some models might require additional hardware. Details of the fix will be made public after the company gets the necessary approval from the German Federal Motor Transport Authority.
Muller is unable to provide a figure on the financial impact to the company at present, but acknowledges that it will be huge.
"While the technical solutions to these problems are imminent, it is not possible to quantify the commercial and financial implications at present," said Muller.
He added that the company must now respond swiftly: "That is why we have initiated a further critical review of all planned investments. Anything that is not absolutely necessary will be cancelled or postponed. And it is why we will be intensifying the efficiency program. To be perfectly frank: this will not be a painless process."
Volkswagen AG have previously announced that it has set aside 6.5 billion Euros to cover the cost of fixing the affected vehicles, but that might not be sufficient to cover the cost of fines and other potential legal damages.