VW ‘will need bigger cash pile to pay fines’

The new chief of scandal-hit Volkswagen braced his workforce for tough times ahead on Tuesday, admitting that billions laid aside for fines and damages arising from a massive pollution cheating scam will not be enough.

VW 'will need bigger cash pile to pay fines'
VW boss Matthias Müller speaking to the press on September 25th. Photo: DPA

In a speech to 20,000 staff at the group's Wolfsburg headquarters, Matthias Müller said all planned investments would be reviewed, while also vowing to try to prevent lay-offs as the company struggles with the deepest crisis in its history.

“The commercial and financial consequences are not yet foreseeable,” he said. “One thing is certain: The burden will be big. Potentially very big.”

Volkswagen, which this year became the world's biggest carmaker by sales, has admitted to fitting vehicles with so-called defeat devices which detect when a car is undergoing testing and switch the engine to a low-emissions mode.

It switches off this mode when the car is back on the road, allowing it to spew out far higher emissions than permitted.

The global scam has wiped more than 40 percent off Volkswagen's market capitalisation and forced former chief executive Martin Winterkorn to resign.

His successor, the former boss of the group's luxury sports brand Porsche, shared more bad news with his workforce in a speech on Tuesday.

Müller said the €6.5 billion the company had set aside in the third quarter due to the scandal were just the start.

“It includes the estimated cost to fix the affected vehicles,” he said.

“But it won't be enough. We must prepare for significant penalties. And many could take the events as an opportunity to claim damages against Volkswagen.”

In the United States alone, VW could face up to $18 billion (€16.05 billion) in fines.

The car chief said the company was taking a second look at all planned investments, after VW had announced a €86-billion five-year investment plan last November.

We are reviewing all planned investments once again,” he said.

“What is not absolutely necessary right now will be scrapped or postponed,” Müller told staff, adding that “every euro that stays in the company helps us”.

Jobs impact

Müller told employees the company will fight to limit the fallout on its workforce of 600,000 at over 100 plants worldwide.

“As for jobs at Volkswagen: We still do not know today what impact the crisis will have,” he said.

“But we will fight to keep it as small as possible. And we will do everything in order to keep employees in the company.”

In Germany he said Volkswagen had flexibility and could vary work rosters and production volumes, adding that “the tight cohesion between seven locations and workforces has always helped us to cushion great hardships collectively”.

Earlier Tuesday Volkswagen said that eight million of its 11 million affected diesel vehicles were sold in the European Union.

A VW spokesman confirmed the figure to AFP, after the company mentioned the figure in a letter to lawmakers in which it apologized for the “wrongdoing of a small group of people” within the group, according to Handelsblatt business daily.

VW has vowed to get to the bottom of the scandal with an internal probe and a separate investigation led by a team of US lawyers.

By Wednesday, it must lay out a roadmap to German regulators on how it will make its cars legally compliant with emissions guidelines.

Of the eight million vehicles affected in the 28-nation EU, some 2.8 million are in Germany, 1.2 million in Britain, nearly a million in France and 650,000 in Italy, according to information previously released by the company.

In terms of brands, Volkswagen is the most affected with five million cars, but vehicles made by other companies in the VW Group also carry the deception software, among them Audi, Seat and Skoda.

In another repercussion of the VW crisis, Germany's wealthiest family has taken a major financial hit, although they remained at number one spot on the country's rich list, according to a report by Manager Magazin weekly.

The siblings Susanne Klatten and Stefan Quandt – who hold 46.7 percent of BMW shares – saw their fortune shrink to €26.5 billion, down from the family's combined wealth of €31 billion last year, as the entire German auto sector took a hit in the market over the VW crisis.

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Two hospitalized in Munich after activist crashes parachute into Euro 2020 stadium

At least two people were hospitalised Tuesday after a Greenpeace activist crash-landed on the pitch before the Germany-France match at Euro 2020 when his powered parachute microlight struck spidercam cables at Munich's Allianz Arena.

Two hospitalized in Munich after activist crashes parachute into Euro 2020 stadium
The activist lands on the turf of the Allianz Arena. credit: dpa | Christian Charisius

The pilot flew over the pitch just before kick-off in the Group F clash with “Kick out oil” written on the canopy of his parachute.

However, when the pilot hit television cables above the pitch, it knocked his microlight off balance and he landed on the turf after clipping one of the stands, where the casualties happened.

The activist was arrested soon after landing.

A Munich police spokesman told AFP that at least two people suffered head injuries and “both had to be taken to hospital, we don’t know yet how serious the injuries are”.

The police spokesman said the activist appears to have escaped injury, but “we are considering various criminal charges. Munich police has zero understanding for political actions that put lives at risk”.

UEFA also slammed the botched stunt.

“This inconsiderate act – which could have had very serious consequences for a huge number of people attending – caused injuries to several people attending the game who are now in hospital and law authorities will take the necessary action,” European football’s governing body said in a statement.

The parachutist above the stadium. Photo: dpa | Matthias Balk

“The staging of the match was fortunately not impacted by such a reckless and dangerous action, but several people were injured nonetheless.”

The stunt was a protest against German car manufacturer Volkswagen, one of the sponsors of the European Championship, Greenpeace explained in a Twitter post.

“UEFA and its partners are fully committed to a sustainable Euro 2020 tournament and many initiatives have been implemented to offset carbon emissions,” said UEFA.

Greenpeace said they regretted any harm caused.

“This protest was never intended to disrupt the game or hurt people,” read a Twitter post on Greenpeace’s official German account.

“We hope that everyone is OK and that no one was seriously injured. Greenpeace actions are always peaceful and non-violent.”

“Unfortunately, not everything went according to plan.”

READ MORE: Climate activists rage as Germany opts for drawn-out coal exit