Volkswagen Vastly Underestimated Cost of Emissions Scandal
Volkswagen has announced a substantial increase in potential costs to resolve the automakers ongoing emissions scandal.
About the Increased Provisions
After a diesel emissions scandal, Volkswagen said it would set aside $9.8 billion for potential costs or recalls. VW chief executive Matthias Mueller waited for a deal to be established with the US authorities to come up with figures for the total cost of the emissions scandal.
Now, they are telling shareholders that they finally came up with a bigger number for their emissions bill—more than $23 billion.
Reason for the Volkswagen’s Increased Emission Bill
According to BBC News, the cost was increased in order to buy back vehicles, fix cars that violate air pollution standards, and pay for legal costs.
Due to nitrogen dioxide found in some diesel cars, a team of German car makers agreed to recall about 630,000 diesel cars to adjust settings that violated air pollution standards. More than 500,000 American owners of its diesel cars were affected by the emissions cheating.
The increased emissions provision pushed VW to an annual pre-tax loss of $1.9 billion, compared with a profit of $21.4 billion the previous year.
VW still faced fines and criminal charges implemented by the US justice department.