Volkswagen’s diesel emissions cheating scandal continues to get more expensive as the automaker disclosed Friday it would take a $2.95 billion charge in the third quarter due to higher-than-expected vehicle buyback and retrofit costs.
The charge will bring the total “Dieselgate” bill past $30 billion, including legal settlements and regulatory fines. As Reuters reports, VW shares fell as much as 3% on Friday, as traders and analysts expressed dismay that the company was still booking charges for the scandal.
The news was unexpected and unwelcome, “not only from an earnings and cash flow perspective but also with respect to the credibility of management,” Evercore ISI analyst Arndt Ellinghorst said.
VW attributed the latest charge to “an increase in provisions relating to the buyback/retrofit program for 2.0l TDI vehicles.” The program “is proving to be far more technically complex and time consuming,” the company said.
Before Friday, VW had set aside 22.6 billion euros ($26.7 billion) to cover costs such as fines and vehicle refits. As recently as Sept. 11, chief executive Matthias Mueller said in an interview with Reuters that provisions made to date would suffice.
“It has now become clear that we need to do more,” a spokesman said Friday.
Europe’s biggest automaker admitted in September 2015 that it had used illegal software to cheat U.S. diesel emissions tests. Last year, it agreed with U.S. authorities to spend up to $15.3 billion to buy back or fix up to 475,000 2.0-litre polluting diesel cars.
“The new write-down comes as may investors had hoped the financial fallout from the scandal was in the company’s rearview mirror,” Fox Business said, adding that the more VW spends on “Dieselgate,” the less it has to invest in new technology as it tries to shift from combustion engines.
BNP Paribas analyst Stuart Pearson said he has provided for another 1 billion euro charge to hit VW’s fourth-quarter results because of outstanding technical fixes for the 3.0-litre Audis. “Investors will understandably worry what else may be next,” he said.