By on April 22, 2016

2015 Volkswagen Golf family, Image: Volkswagen of America

The heavy financial cost of Volkswagen’s diesel emissions scandal is becoming clear.

After reaching a settlement yesterday with U.S. consumers and regulators, the automaker is more than doubling the size of its “make the problem go away” cash pile, Bloomberg is reporting.

Volkswagen set aside 16.2 billion euros ($18.6 billion) today to deal with the scandal’s fallout, up from the 6.7 billion euro ($7.6 billion) figure previously stated. 

Though Volkswagen TDI owners in the U.S. are likely pleased to see action on the compensation front, VW shareholders won’t like this news one bit. To free up the cash, the automaker cut its annual dividend by 97 percent. Expect plenty of empty stockings in Wolfsburg this Christmas.

Volkswagen CEO Matthias Mueller put on a grim tone, explaining in a statement, “The current crisis — as the figures presented today reveal — is having a huge impact on Volkswagen’s financial position.”

The financial hit goes beyond shareholders, with the company’s management board now facing years of reduced pay.

“As a result of the current performance figures, which are poorer, there will be a reduction in the variable remuneration covering several years and also in the individual performance-related bonus component,” Volkswagen AG said in a media release. “This effect will also be felt over the next few years.”

The amount of variable remuneration paid to board members for the 2015 fiscal year will be 57 percent lower than the previous year.

After a lengthy delay, Volkswagen will release its 2015 earnings report on April 28. First-quarter earnings from 2016 will see the light of day on May 31.

Amid all the spending on recalls and buybacks, not to mention the various fines and lawsuits, Volkswagen predicts flat sales and a five percent revenue drop for this year. Later this year, sometime in the fourth quarter, the results of an internal investigation by law firm Jones Day will land on the automaker’s plate.

[Image: Volkswagen of America]

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15 Comments on “Volkswagen Fills its Scandal Jar With $18.2 Billion, Warns of Financial Pain Ahead...”

  • avatar

    How do you say “shine up your resume” in German?

  • avatar

    We may have front row seats to the END of VW.

    Never liked em anyway…

  • avatar
    SCE to AUX

    Also, ominously, per CNN Money:

    “The company also said it will not publish the findings of its investigation into the diesel scandal later this month, as originally announced. It said a disclosure of the interim results would ‘present unacceptable risks for Volkswagen.\'”

    Sounds like another shoe to drop, maybe related to the 1999 creation of this software, or who knew what, and when?

    • 0 avatar

      The US DOJ asked them to hold off on releasing their results as it would interfere with the criminal investigations that are ongoing. One assumes that they had a degree of leverage in making this request that equate to “unacceptable risks for Volkswagen”. Either that or there is a smoking gun that would potentially blow up the tentative deal that they reached with the government and the class action lawyers.

  • avatar

    Sell the US plant. VW can’t afford it and they don’t need the capacity.

    Every time VW builds a US plant they go into the crapper. VW product isn’t good enough to command a premium anymore, if it ever was.

    The past as prologue or

    Deja vu all over again:

    “Volkswagen to Shut U.S. Plant : Closure Blamed on Slow Sales of Cars Considered Outdated, Overpriced”

    • 0 avatar

      Well that’s weird, the 2016 Passat is outdated even though it was “refreshed”. Price isn’t really competitive either unless you throw a bunch of cash on the hood. I think they’ll keep Chattanooga open though, need capacity for their SUV that’s coming out in 2020.

  • avatar

    right westmoreland redux and this time around no one gonna want to buy the new truck, who cares, they lost me a while ago

  • avatar

    One gets the feeling as though VW’s getting “piled-on.” (and this is from no fan of Volkswagen, either). It’s the song that seemingly never ends.

  • avatar

    Well, it’s not as if VAG management has failed to ask for it. Mueller’s NPR interview debacle has to taken as emblematic of how the problem has been handled to date.

    This, I might add, coming from a VW owner who will probably flee not because they did it in the first place, but because they compounded the problem so creatively.

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