Volkswagen will pay up—but not as much as you thought

November 19, 2015 01:57 PM


Volkswagen will probably incur much lower costs than expected for recalling 2.4 million diesel-powered cars in Germany fitted with illegal emissions-control software, German magazine Wirtschaftswoche reported on Thursday.

It did not cite a source for its information.

The technical fixes for 1.6 liter diesel engines require installing a 10-euro ($10.74) sensor inside the air filter and a software update, the weekly magazine said.

A simple hardware solution could reduce total recall costs for the 11 million affected vehicles worldwide by three billion euros and enable VW to fix the cars more rapidly, Arndt Ellinghorst, of banking advisory firm Evercore ISI, said in a note sent to reporters.

"This would be a major relief for the company, its customers and shareholders," said Ellinghorst, who has a 'buy' rating on VW shares.

VW declined comment on the article, but said it is aiming to come up with the "best technical solution" for customers as its talks with Germany's KBA automotive watchdog remain under way.

Europe's largest automaker has set aside 6.7 billion euros to help cover costs related to the recalls. The bulk of the 8.5 million affected cars in Europe have two-liter diesel engines which only require a software update.


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