Volkswagen: we may have to sell assets to pay for the emissions scandal

Volkswagen badgeVolkswagen Group may have set aside €16.2 billion to pay for the emissions scandal (and further billions to cover legal bills) but the firm has admitted even this may not be enough – and says there’s a risk may have to consider selling assets to pay the dieselgate bill.

In its latest Annual Report, the firm outlines the risks from the emissions issue and says that there may be further “significant financial liabilities” on the horizon, particularly from legal risks, criminal and administrative proceedings, costlier-than-expected technical solutions and lower market prices.

Repurchase obligations are also noted, in reference to the recent agreement to buy back cars in the United States. The firm also admits that demand for its cars may decrease, “possibly exacerbated by a loss of reputation or insufficient communication”.

And how will it pay for all these risks if they come to pass? In the worst case scenario, it acknowledges, by selling stuff: “The funding needed to cover the risks may lead to assets having to be sold due to the situation and equivalent proceeds of them not being achieved as a result”.

What could Volkswagen Group sell?

Volkswagen Group is, of course, an asset-rich company. It owns:

  • Volkswagen Passenger Cars
  • Volkswagen Commercial Vehicles
  • Audi
  • Bentley
  • Bugatti
  • Lamborghini
  • Porsche
  • Ducati
  • MAN
  • Scania
  • SEAT
  • Skoda

Could the emissions scandal possibly lead to it having to sell one or more of those marques? And if so, who would it sell to?

Ironically, Volkswagen’s huge loss reported for the last financial year includes a $3.8 billion windfall from Suzuki, which completed a stock buy-back of Volkswagen’s stake in it back in September 15 – just before news of the emissions crisis broke…

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