Volkswagen plays down hopes of quick answers over emissions cheating

More than two weeks after it admitted to cheating U.S. emissions tests, Europe’s largest carmaker is under pressure to identify those responsible, to say how vehicles with illegal software will be fixed and whether it also cheated in Europe.

“Nobody is served by speculation or vague, preliminary progress reports,” Hans Dieter Poetsch told a news conference after being confirmed as the German company’s new chairman.

“Therefore it will take some time until we have factual and reliable results and can provide you with comprehensive information,” he added, declining to take any questions.

Later on Wednesday, Volkswagen is due to submit a plan to Germany’s KBA watchdog to spell out how it will make its diesel vehicles comply with emissions laws. The German transport ministry said it had been assured by the company that the deadline would be met.

On Thursday, Volkswagen’s top U.S. executive will testify before a U.S. congressional oversight panel.

Both events come as investigations and lawsuits against the company continue to pile up.

According to a letter released on Wednesday, top senators on the U.S. Senate Finance Committee are investigating Volkswagen’s actions related to federal tax credits designed to reward consumers for buying environmentally-friendly vehicles.

Poetsch addressed reporters after the carmaker’s 20-person supervisory board met at its headquarters in Wolfsburg to discuss the progress of its internal investigation into the biggest business crisis in the company’s 78-year history.

The scandal has wiped more than a third off its share price, forced out its long-time chief executive, led its new CEO to predict “massive cuts”, and sent shockwaves through both the global car industry and the German establishment.

One source close to the matter said there was a “certain degree of fright” among management ahead of U.S. chief Michael Horn’s appearance before the congressional panel.

However, the source said it was too early to name those responsible for installing software in some diesel engines to manipulate emissions tests.

Poetsch, 64, promised U.S. law firm Jones Day, which is conducting an external investigation, the company was “leaving no stone unturned.”

WHAT’S THE COST?

Volkswagen has said it may have to refit up to 11 million cars and vans worldwide, and new CEO Matthias Mueller said in a newspaper interview on Wednesday recalls would start in January and would be completed by the end of 2016.

But owners are anxious to know whether the refits will affect the fuel-economy and performance of their vehicles.

Volkswagen has said the illegal software was not activated on the bulk of the 11 million vehicles, most of which are in Europe, leaving uncertainty over whether it rigged tests there.

The German transport ministry has said it did manipulate European tests too, but has not given details, making it unclear whether the company faces the same level of fines and lawsuits in Europe as in the United States. It is also unclear whether owners will be obliged to have their vehicles refitted.

Equinet analysts said the cost of refits could range from less than 100 euros ($112) per vehicle to as much as 10,000 euros, depending on whether Volkswagen needs to upgrade software or install new hardware.

UBS analysts estimated the total bill for the scandal, including potential fines and lawsuits, could be around 35 billion euros, though they also noted this was more than factored into the company’s share price after its recent plunge.

COMPANY VETERANS

In his newspaper interview, Mueller rejected the suggestion Volkswagen informed financial markets too late about the test rigging despite having told officials at the U.S. Environmental Protection Agency weeks before it went public.

“Based on our understanding of the law, we informed in time,” he was quoted as saying.

He also said he believed only a few employees were involved in the manipulations.

In private, other German executives have expressed surprise at the appointment as chairman of Poetsch who, in his previous role as chief financial officer, would have had responsibility for deciding when to inform markets about the emissions rigging.

Germany’s financial regulator Bafin has launched a preliminary probe into the circumstances around the announcement. Were it to determine that VW violated strict communication rules, Poetsch could come under scrutiny.

In the meantime, U.S. lawmakers are bound to press for detailed information on the emissions cheating.

“We have a lot of questions. We have very few answers,” complained Representative Diana DeGette of Colorado, the top Democrat for subcommittee.

Officials in Germany, where Volkswagen has been held up for years as a model of the country’s engineering prowess, are also anxious for news.

“I now expect a very transparent investigation of the circumstances. I am convinced that we will get more and more clarity,” Klaus Mohrs, the mayor of Wolfsburg where Volkswagen employs around 70,000 people, told Reuters.

Data on Wednesday showed German industrial output fell at its steepest pace in a year in August, suggesting Europe’s largest economy may be losing momentum just as the Volkswagen scandal casts a cloud over manufacturing.

The car industry employs more than 750,000 people in Germany and is a major source of export income.

Some analysts and investors are worried company veterans such as Mueller and Poetsch will not introduce the sweeping changes in business practices they think are necessary to restore the company’s reputation.

They are also concerned about the complexity of Volkswagen’s investigations.

One source close to the matter said the supervisory board of the company’s flagship Audi brand would also meet on Wednesday, and has hired accountants to help investigate the scandal too.

Audi is still chaired by former Volkswagen CEO Martin Winterkorn, who resigned two weeks ago. The sources said it was unclear whether he would attend the Audi board meeting.

($1 = 0.8895 euros).

 

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