More bad news coming for Volkswagen

VOLKSWAGEN Group's largest shareholder has reaffirmed its commitment to the besieged automotive giant, as it braces for more bad news and a greater financial impact from the diesel emissions scandal.

Speaking at a works meeting at the main plant in Wolfsburg earlier this week, VW Group CEO Matthias Mueller told staff that the ongoing scandal will inflict “substantial and painful” damage to the company, according to a report by Automotive News.

The report also quoted Mr Mueller as saying that the implications will keep the car-maker busy “for a long time”.

Mr Mueller was also positive about Volkswagen's future, encouraging workers to unite in a bid to strengthen the company during its transition phase.

“Despite the different views which people will of course have within a company, we know that we can only do it together.” He added that workers should see the transformation “not as a threat but as an opportunity”.

“Together, we must make the necessary changes to safeguard the future of Volkswagen,” he said.

The German state, Lower Saxony, holds 20 per cent of Volkswagen's common shares, and its prime minister Stephan Weil told the works meeting that it would continue to support VW through the scandal.

“Lower Saxony has had a very close connection with Volkswagen for decades,” Mr Weil said. “The state is standing by Volkswagen and its employees – in good times and in not so good times.

“There is no reason to make any changes to the close links between the state and employees at Volkswagen. Let us carry on with confidence and commitment on this basis.” According to a Reuters report, Mr Weil cautioned that there was likely to be more bad news for the car-maker down the track and added that the consequences would be significant.

“We will this year probably every now and then be confronted with unpleasant news related to dieselgate,” he said.

“The damage will, on balance, not be minor, as much as that can already be said today but Volkswagen luckily has a strong economic substance.” Chairman of the VW Group works council, Bernd Osterloh told the meeting that the company was on the right track to rebuild its reputation.

“We are in absolute agreement we are determined to bring Volkswagen back on the road to success together,” he said.

“We are well aware that this is what our customers, our employees, shareholders, politicians and the public expect – and rightly so.” Mr Osterloh told the employees that “relentless clarification” of the issues relating to the crisis had the full support of company management, “Only when we have thoroughly clarified these events can we avoid further damage to our company and to our jobs. As a workforce, we will fight hard to make sure that Volkswagen emerges from this crisis with new strength.” Mr Mueller highlighted the importance of the Volkswagen brand and added that he was impressed by the dedication of the staff during the crisis.

“The core brand Volkswagen and our main plant in Wolfsburg bear a special responsibility,” he said.

“I am deeply impressed by the way our employees are standing by Volkswagen despite everything that has happened and how everyone is working to confirm the trust of our customers.” He said that a staff bonus that had been decided on for 2015 was “well-earned and justified”.

Mr Mueller highlighted the company's recent announcements at the Geneva motor show relating to electro-mobility and digitalisation as proof “that Volkswagen is more than just a crisis”, adding “we have clearly shown that we are embarking on the future of mobility with determination”.

The crisis began to unfold in late September last year when it was discovered that Volkswagen had deliberately fitted some VW, Skoda, Audi and Seat models with a device that only activated full emissions controls under test conditions, allowing much higher emissions during normal driving.

The device impacted about 11 million vehicles globally, with Australia starting its recall to fix earlier in late February.

Meanwhile, Reuters is also reporting that VW delayed announcing that it had cheated United States diesel emissions tests so it could strike a deal with regulators to limit the cost of the scandal, according to a German court report filed by the company's lawyers.