And there's more to come in 2019.
For those who assumed Volkswagen was free and clear from Dieselgate assumed wrong. According to Reuters, the German automaker, the second-largest automaker in the world behind Toyota, has been spending billions of dollars for cleanup costs resulting from the scandal. For 2018, VW spent $6.25 billion, Chief Financial Officer Frank Witter told the German weekly Boersen-Zeitung. It will be spending billions more next year as well. How much?
Witter said it’ll be another $2.28 billion, at the very least. These fines will also continue through 2020, when VW expects to fork over another billion euros or so. Do the math and that means VW will have spent over $9.5 billion in only three years. All told, VW has shelled out over 27 billion euros ($30 billion) to settle investor and consumer lawsuits.
There have also been regulatory fines and other related costs. This is the price of cheating, lying, and deceiving both consumers and governments. Since the scandal broke in September 2015, VW has completely revamped its product strategy and, not to mention, its top executives. Instead of diesel engines, VW is pivoting to an all-electric future with its upcoming lineup of ID branded vehicles, the first of which will premiere in 2019. Witter also pointed out that China continues to be a huge market that will provide it with much-needed income.
Another method for income generation will be to spin off some of its assets, such as its truck business. Witter said this truck spinoff is still planned for 2019. However, despite expensive fines, hardly any former VW executives have faced prosecution for their alleged roles in the emissions scandal cover-up.
Former CEO Martin Winterkorn, allegedly aware of what was going on for quite some time, is still a free man. As is Ulrich Hackenberg, for VW Group chief engineer and the brains behind its MQB flexible platform. He made an unscheduled retirement in 2015 for obvious reason. The only major VW official who has faced punishment is former Audi CEO Rupert Stadler, who only recently got released from jail for his alleged role. He still faces trial.
VW’s reputation has taken a long-term if not permanent hit, but it has since taken full responsibility for its past actions. Paying out billions of dollars/euros is only one but a significant part of its punishment.