VW Takes New $2.9 Billion Hit From Diesel Scandal--Update

By Max BernhardFeaturesDow Jones Newswires

Volkswagen AG warned Friday its third-quarter operating result would take a hit of around EUR2.5 billion ($2.94 billion), as the company continues to grapple with the fallout of the diesel emissions scandal that erupted two years ago.

The new costs stem from an increase in provisions for buyback and retrofitting programs of its 2.01 TDI vehicles in North America. Settlements surrounding that proved to be "far more technically complex and time consuming" than expected, Volkswagen said.

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The car maker continues to reel from the scandal that came to light in September 2015, when it admitted some 11 million of its diesel vehicles world-wide were equipped with software that allowed them to sidestep emissions testing.

Volkswagen pleaded guilty to conspiracy to defraud the U.S. government in late 2016 and agreed to pay nearly $25 billion in fines, penalties and compensation, after it settled a number of civil lawsuits. Two Volkswagen employees have also faced charges in the U.S., with one sentenced to just over three years in prison.

In Germany, Volkswagen employees have also come under investigation. German police arrested Volkswagen's former engine chief Wolfgang Hatz in connection with the scandal, a person familiar with the situation told The Wall Street Journal on Thursday. Mr. Hatz oversaw engine development at the time Volkswagen engineers put together a plan to outfit some engines with the software that allowed them to dodge strict pollution restrictions.

Volkswagen is set to release third-quarter results on Oct. 27.

Write to Max Bernhard at Max.Bernhard@dowjones.com

(END) Dow Jones Newswires

September 29, 2017 04:55 ET (08:55 GMT)