Volkswagen is taking an additional charge of $3 billion to fix its diesel engines across the U.S., which increases the total spent by the company for the emissions test scandal to nearly $30 billion.
Shares at the carmaker, based in Germany, were down 3% during Friday morning trading in Europe, as analysts and traders expressed their dismay that the company continued to book charges a full two years after the cheating scandal came to light.
One Wall Street analyst said that the charge was another unwelcomed, unexpected announcement from the automaker, not only from the standpoint of cash flow and earnings, but with the credibility of the company’s management.
The largest automaker in Europe admitted during September of 2015 that it installed illegal software in its diesel engines to cheat diesel emissions tests in the U.S. which sparked the largest crisis in the 80-year history of the company.
Prior to Friday, the company has put aside $26.7 billion that would cover costs like vehicle refits and fines. However, on Friday it announced that hardware fixes had proved to be tougher than was first expected and it booked the new $3 billion provision.
A spokesperson for VW said the company has to make more hardware changes, and customers in the U.S. were waiting longer for cars to be fixed.
This is related to the VW program for vehicles that was set up to buy back or fix them and is for over 475,000 in the U.S.
In Europe, where just an update to software is needed for over 8.5 million cars, besides just a minor component integration in approximately 3 million of the same, fixes have run smoothly said the VW spokesperson.
The new provision on Friday will be reflected in results at VW for the third quarter due October 27, the company said.
In midday trading in Europe, VW shares were off by 1.8%. They had fallen even further immediately following the announcement of the new provision. Shares are still trading below the levels prior to the scandal.
When the VW spokesperson was asked why the problem was not seen by the automaker sooner, the answer was that VW made its provisions based upon what it has expected at that time. And it became clear at this time more was needed.
In September of 2015, VW announced that nearly 11 million of its vehicles worldwide could have been fitted with cheating software.