In the midst of its alarming emissions cheating scandal—easily the biggest crisis in the automaker's 78-year history—Volkswagen is trying to figure out ways to cut its costs and boost its finances.
According to a Reuters report, Volkswagen's supervisory board has discussed strategies to strengthen its cash flow, but hasn't approachd selling brands or assets...for now, at least. One source told Reuters that the prospect of VW selling shares to raise money would become a likely scenario if the emissions scandal costs surpassed a "critical level."
This is a continued part of the fallout from Volkswagen admitting to cheating in its diesel emissions tests in the United States last week, affecting 11 million cars. Germany's transport minister said it also had deceptive software, allowing it to cheat in emissions tests in 2.8 million vehicles in Germany as well. Just Wednesday (September 30), the carmaker was revealed to reportedly have 1.2 million compromised vehicles in the United Kingdom, too.
Although the carmaker, which replaced resigned CEO Martin Winterkorn with Matthias Mueller, has vowed to refit 11 million rigged vehicles to meet regulation standards, it has a deep hole to climb out of. That already includes a $6.5 billion price tag in the refitting alone. Potential fines from regulators and prosecutors—not to mention lawsuits from drivers—could see that price soar, thus the prompting of ways to spark more cash flow.
VW's board worries that an inability to raise finances may lead to a dip in the brand's credit ratings. There's no doubting that its reputation continues to take major blows by the day.
"This [scandal] is causing damage to the entire German car industry and to German engineering," said Helmut Kluger, publisher of trade magazine Automobilwoche, to Reuters. "There is no excuse whatsoever for the VW cheat. Toyota will remain the world's largest carmaker in the foreseeable future, that's clear now."
How long do you think it will take for Volkswagen to dig itself out of this mess and clean up its damaged reputation?
