VW set for 16.2bn euro hit as German firms prepare for emissions recall
Published 22/04/2016 | 15:46
German car maker Volkswagen is to take a 16.2 billion euro (£12.6 billion) hit in its 2015 accounts related to the diesel-emissions scandal last year.
The announcement came ahead of a news conference at its Wolfsburg headquarters that follows the outlines of a deal with US environmental authorities.
The news emerged as five German car makers said they had agreed to recall a total of 630,000 diesel vehicles in Europe following an investigation into emissions levels.
Germany's transport minister Alexander Dobrindt identified the companies as Mercedes, Opel, Volkswagen and its subsidiaries Audi and Porsche.
The move followed a probe of 53 models by Germany's Federal Motor Transport Authority sparked by revelations last year about Volkswagen's emissions test cheating.
Under the terms of Volkswagen's proposed deal with US authorities, the company would offer to buy back almost 500,000 cars equipped with software that let the cars cheat on emissions tests.
The firm had delayed its earnings announcement until it could get a better estimate of the costs involved. Analysts say the total costs in fines, legal judgments and lost sales will be significantly higher.
Volkswagen also said it will not be able to release results of an internal probe of its emissions scandal this month as expected. The probe conducted by US law firm Jones Day could be completed by the end of the year.
The company said early release of partial results would interfere with settlement negotiations in the US and could hamper co-operation with US law enforcement.
However, it said will post an after-tax loss of 1.36 billion euros (£1.06 billion) for the year and a net loss of 5.5 billion euros (£4.3 billion).
Mr Dobrindt said none of the newly scrutinised models were found to have defeat devices of the kind used by Volkswagen, but that they displayed elevated levels of nitrogen oxide in both laboratory and real-world tests.
Some models used technology to switch off the vehicles' emissions treatment systems at certain temperatures to protect the engine, he said.
While such technology is legal, investigators found that the temperatures at which the emissions treatment systems were throttled did not appear to be justified in all cases, so the five manufacturers agreed to voluntarily recall those vehicles.
Additionally, all engine protection features will have to be declared and fully explained by manufacturers in future before their cars are approved by German authorities, Mr Dobrindt said.