VW action plan

Adel Murad
Adel Murad

Adel Murad


By : Adel Murad


Volkswagen Group (VW) posted a third quarter operating loss of 3.84 billion euros ($3.84 billion) compared to 3.3 billion euros profit for same period a year ago. The rigging of diesel emission tests accounted for 6.7 billion euros in special costs in the third quarter. The company put aside this sum for potential fines and costs.

There is growing speculation that VW may have to spin off Porsche in order to release funds for covering costs emanating from the emission scandal. In addition, the whole of North American Division will have to be restructured.

The rating agency Moody’s warned that VW costs from fines, lawsuits and recalls could cost up to $31 billion. In order to raise such funds, automotive analyst with investment bank Evercore, George Galliers said “They could list 40 percent of Porsche and maintain control and that would unlock a lot of value for shareholders.

There is growing speculation that VW may have to spin off Porsche in order to release funds for covering costs emanating from the emission scandal.

Adel Murad

Galliers believe that Ferrari offers an excellent case study of how easily it could be done. Other divisions within VW, including the commercial division, can also be listed for public investment.

VW acknowledges the need for overhauling its North American business. Yet, it has decided to shelve the move until the current crisis has abated. One source said “what matters now more than anything is to sort out this disaster.” The options include stopping selling diesel models in the US market. These accounted for 22 percent of total VW sales last year.

Whatever the VW action plan may be, the company should regroup and focus more on quality control rather than expansion. It would be a good idea to also give up on the notion of being No. 1 in the world, a position that did not serve GM or Toyota well in the past.


Adel Murad is a senior motoring and business journalist, based in London. Email: adel.murad@ntlworld.com


Disclaimer: Views expressed by writers in the Column section are their own and do not reflect RiyadhVision’s point-of-view.


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