It's a Day That Ends With "Y", Meaning More Bad News for Volkswagen

There’s never a dull moment at Volkswagen, and today the automaker finds itself fighting battles on so many fronts they’ll soon be wishing for General Eisenhower’s plotting table.

As the company steels itself for further bad terrible financial news, German prosecutors have widened their probe into the diesel emissions scandal and targeted 17 Volkswagen employees.

The new headcount is a big jump from the earlier six suspects, and authorities have said they’re not done looking. So far, none hail from Volkswagen’s management board, but Klaus Ziehe, a spokesman for the state’s attorney’s office, has said that management involvement has not been ruled out.

On the other side of the Maginot Line, French authorities announced they have opened a formal fraud investigation into the emissions scandal.

Just in the past week, Volkswagen had to admit to U.S. regulators that it will miss a District Court-issued deadline for an emissions fix for that country’s fleet of affected vehicles. At the same time, questions are being raised about the amount of knowledge upper management had of the diesel deception prior to last September’s EPA notice of violation.

The company is now gritting its teeth as it awaits its 2015 earnings report, a very unhappy document that was delayed by the unfolding scandal and is expected to come out on April 28.

Volkswagen Group CEO Matthias Müller has said the financial pain to the company will be “substantial and painful,” especially considering the fines that will eventually have to be paid.

Future fines and possible lawsuit payouts weren’t factored into the $7.49 billion the automaker set aside last year to finance the recall of about 11 million affected vehicles, meaning it might have to set aside about $17 billion more.

With a stop order in place on the sale of 2015 and 2016 diesel vehicles and plummeting U.S. sales as a result of the scandal, the financial storm has just begun for Volkswagen, and that’s making workers nervous.

The company’s worker union has said it supports Volkswagen’s efforts to dig its way out of its financial problem via efficiencies and restructuring, but not if it means cutbacks to staff.

Müller and Volkswagen brand chief Herbert Diess met with workers and their labor boss Bernd Osterloh in Wolfsburg, Germany on March 8 in an attempt to reach an understanding about the situation.

Osterloh has previously called the company’s plan to improve productivity “unrealistic,” and by all accounts remains at loggerheads with management.

And that was Tuesday, March 8 at Volkswagen.

[Sources: Automotive News, New York Times, Bloomberg]