Volkswagen adds €2.5bn to emissions costs

Volkswagen has added provisions of around €2.5bn to the mounting total from its diesel emissions scandal, which has already cost the company around €23bn.

“The reason is an increase in provisions relating to the buyback/retrofit programme for 2.0l TDI vehicles, which is part of the settlements in North America that is proving to be far more technically complex and time consuming,” the company said in a statement.

Its shares dropped after the statement and were down as much as 3.1% before paring losses. Volkswagen has recalled around 11 million vehicles worldwide since admitting two years ago to manipulating emissions tests in the US. About 8.5 million of those are in Europe.

“You have to ask if this is a bottomless pit,” said one Frankfurt-based trader.

Volkswagen said the extra provisions would be reflected in its third-quarter operating results, which are due to be published at the end of next month.

Porsche, which owns a 30.8% stake in Volkswagen, said the new provisions would also affect its results, but stuck to a wide range for its expected 2017 post-tax profit of between €2.1bn and €3.1bn.

Prosecutors arrested a former Porsche board member in connection with the emissions scandal at Audi, sources said this week.

Audi admitted in November 2015, two months after parent Volkswagen’s diesel emissions scandal broke, that its 3.0 litre V6 diesel engines were fitted with an auxiliary control device deemed illegal in the US.