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VW sets aside $7.3B war chest for diesel scandal fallout

The crisis enveloping Volkswagen AG, the world's top-selling carmaker, escalated Tuesday as the company issued a profit warning following a stunning admission that some 11 million of its diesel vehicles worldwide were fitted with software at the center of a US emissions scandal. The German company said it was setting aside around 6.5 billion euros ($7.3 billion) to cover the fallout from the scandal that has tarnished VW's reputation, raised questions over the future of CEO Martin Winterkorn and battered its share price. The reputational damage to Volkswagen is implicit in the market's response. Volkswagen's share price slid a further 16.2 percent Tuesday to a near four-year low of 112 euros. The fall comes on top of Monday's 17 percent decline. The shockwaves from the scandal enveloping Volkswagen were being felt far and wide across the sector as traders wondered who else may get embroiled. Germany's Daimler AG, the maker of Mercedes-Benz cars, was down 6.5 percent, while BMW AG fell 5.4 percent. France's Renault SA was seven percent lower. The scandal is hugely damaging to a business that relies heavily on a hard-won reputation for quality and trustworthiness. "Brands are all about trust and it takes years and years to develop. But in the space of 24 hours, Volkswagen has gone from one people could trust to one people don't know what to think of," said Nigel Currie, an independent UK-based sponsorship and branding consultant. The trigger to the company's market woes was last Friday's revelation from the US's Environmental Protection Agency that VW rigged nearly half a million cars to defeat US smog tests. The company then admitted that it intentionally installed software programmed to switch engines to a cleaner mode during official emissions testing. The software then switches off again, enabling cars to drive more powerfully on the road while emitting as much as 40 times the legal pollution limit. "We have totally screwed up." - Michael Horn "In my German words: we have totally screwed up," the head of Volkswagen's US division, Michael Horn, told an audience in New York on Monday. In its statement Tuesday, Volkswagen gave more details, admitting that there were "discrepancies" related to vehicles with Type EA 189 engines and involving some 11 million vehicles worldwide. The number of vehicles involved is more than the 10 million or so cars it sold in 2014.

VW Golf Sportsvan succeeds Golf Plus in Frankfurt

Just ahead of this week's Frankfurt Motor Show, Volkswagen has announced the world premiere of its Golf Sportsvan, a near-production concept that succeeds its Golf Plus. VW describes this compact family car as "one of the most versatile vehicles of the compact class," noting that it offers a mix of hatchback and minivan features in a sporty package.
That sportiness comes from the Sportsvan's styling (perhaps more sleek wagon than minivan) and performance features it shares with the Golf GTI - including the XDS+ electronic differential lock, which is integrated into the Electronic Stability Control system to improve agility. At the same time, the Sportsvan's six engine options, which include a turbodiesel, are up to 19-percent more fuel-efficient than their predecessors.

Volkswagen Golf voted 2013 European Car of the Year

The seventh-generation Volkswagen Golf just went on sale in Europe, but it is already off to a promising start. Announced as the Geneva Motor Show kicked off, the newest Golf was named European Car of the Year for 2013 in dominating style over cars like the Subaru BRZ/Toyota GT86 twins, Volvo V40, Ford B-Max and Mercedes-Benz A-Class.
According to Automotive News Europe, the MkVII Golf won handily over its rivals with a total of 414 votes. The Subaru BRZ and Toyota GT86 received 202 votes finishing in a distant second, while the Volvo V40 (189 votes), Ford B-Max (148 votes) and Mercedes-Benz A-Class (138 votes) round out the top five. The new Golf marks the third Volkswagen product to receive the prestigious award with previous cars including the MkIII Golf and the most recent iteration of the Polo.