Volkswagen is gearing up for the largest recall in company history. Newly-appointed CEO Matthias Müller said to a meeting of up to a thousand managers that $7.3 billion has been put aside to repair up to 11 million cars fitted with "defeat devices." Some cars will also need hardware changes in addition to the software recall, The Verge reported.
The company is confident that, amidst the scandal and loss of public trust, it will be able to mend the damage done but it will not be easy. He told his managers that "we are facing a long trudge and a lot of hard work." He added that "we will only be able to make progress in steps and there will be setbacks."
The German government has also weighed in as the scandal threatens the country's economy. Economy Minister Sigmar Gabriel said that he was not worried about damage to the economy, "at least, not if we deal with it sensibly," Reuters quoted him.
The company employs more than 750,000 people and its export income is huge. The Kraftfahrt-Bundesamt (KBA) or Germany's transport authority has also given the company up to October 7 to come up with a final plan subject to its approval. Investors are just as eager get some definite answers from Volkswagen, too.
A survey by Evercore ISI, an investment bank advisory firm, found that of the 62 institutions included in the study, a good 2/3 will not invest in VW over the next six months if costs, fines, and other expenses are not quantified properly.
The recall affects 5 million VW cars, 2.1 million Audis, 1.2 million Skodas, and 1.8 million light commercial vehicles. And while the expenses of the recall are pretty much outlined already, Volkswagen could face much stiffer penalties which could amount to $18 billion. An investigation is ongoing with the Environmental Protection Agency and Justice Department regarding this.
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