VW warns staff of tough times ahead

  • 07/10/2015
Bernd Osterloh, head of Volkwagen's works council, addresses a news conference in Wolfburg, Germany (Reuters)
Bernd Osterloh, head of Volkwagen's works council, addresses a news conference in Wolfburg, Germany (Reuters)

The new chief of scandal-hit Volkswagen has braced his workforce for tough times ahead, while admitting that billions laid aside for fines and damages arising from a massive pollution cheating scam will not be enough.

In a speech to 20,000 staff at the group's Wolfsburg headquarters on Tuesday, Matthias Mueller said all planned investments would be reviewed, while also vowing to try to prevent lay-offs as the company struggles with the biggest crisis in its history.

"The commercial and financial consequences are not yet foreseeable," he said.

"One thing is certain: The burden will be big. Potentially very big."

Volkswagen, which this year became the world's biggest carmaker by sales, has admitted to fitting vehicles with so-called defeat devices which detect when a car is undergoing testing and switch the engine to a low-emissions mode.

It switches off this mode when the car is back on the road, allowing it to spew out far higher emissions than permitted.

The global scam has wiped more than 40 per cent off Volkswagen's market capitalisation and forced former chief executive Martin Winterkorn to resign.

His successor, the former boss of the group's luxury sports brand Porsche, shared more bad news with his workforce in Tuesday's speech.

Mueller said the 6.5 billion euros (NZ$12.26 billion) the company had set aside in the third quarter due to the scandal was just the start.

"It includes the estimated cost to fix the affected vehicles," he said.

"But it won't be enough. We must prepare for significant penalties. And many could take the events as an opportunity to claim damages against Volkswagen."

In the United States alone, VW could face up to US$18 billion (NZ$25.4 billion) in fines.

The car chief said the company was taking a second look at all planned investments, after VW had announced an 86-billion-euro five-year investment plan last November.

Mueller told employees the company will fight to limit the fallout on its workforce of 600,000 at over 100 plants worldwide.

"As for jobs at Volkswagen: We still do not know today what impact the crisis will have," he said.

"But we will fight to keep it as small as possible. And we will do everything in order to keep employees in the company."