VW seeks to boost finances to meet emission scandal costs
By

BERLIN: Volkswagen (VOWG_p.DE) is looking at ways to cut costs and boost cash flow and could sell more shares if the price of clearing up a scandal over its rigging of diesel emissions tests puts its credit rating at risk.

The German carmaker’s supervisory board has discussed ways of strengthening its finances, but has not talked about selling off assets or brands, two sources close to the board told Reuters.

One source said raising money by selling more shares would become likely if the cash costs of the scandal exceeded a “critical level”, without elaborating.

Volkswagen declined to comment.

Europe’s largest carmaker has admitted cheating in diesel emissions tests in the United States and Germany’s transport minister says it also manipulated them in Europe, where Volkswagen sells about 40 percent of its vehicles.

The biggest crisis in the company’s 78-year history has seen its shares plunge more than a third in value and forced out long-time chief executive Martin Winterkorn, who is now being investigated over allegations of fraud.

It has also sent shockwaves through the global auto industry and the German establishment, which has for years held up Volkswagen as a model of the country’s engineering prowess.

The company has set aside 6.5 billion euros ($7.2 billion) to help cover the costs of the scandal, but some analysts think the final bill could be much higher.

Volkswagen has said it will refit up to 11 million vehicles containing software capable of cheating emissions tests. It also faces potential fines from regulators and prosecutors, lawsuits from consumers and investors, and a possible hit to sales and prices from the damage to its reputation.

Recommend to friends

Leave a comment