Volkswagen Says ‘We Screwed Up’ Then Sets Aside $7.3 Billion For Fines

BURBANK/CALIFORNIA - JULY 26, 2014: 1961 Volkswagon Beetle "Herbie" from the movie "The Love Bug" on display at the Burbank Car Classic July 26, 2014, Burbank, California USA

Volkswagen Scandal

Volkswagen AG has set aside $7.3 billion in the third quarter to pay for US fines that could be levied against the company.

Technically, the Environmental Protection Agency (EPA) could issue fines to VW upwards of $18 billion or $37,500 per vehicle. However, most analysts do not believe that fines will reach that plateau.

While 500,000 vehicles are targeted in the United States, irregularities in diesel engines may affect upwards of 11 million vehicles worldwide.

“Volkswagen is working at full speed to clarify irregularities concerning a particular software used in diesel engines,” the company said in statement. The manufacturer said it will adjust its earnings forecasts for 2015 accordingly.

On Tuesday Germany, France, and South Korea officials said they were investigating the situation. The U.S. Justice Department has also begun a probe.

On Monday, Michael Horn, the head of the VW brand in the US, issued the following apology: “Our company was dishonest with the EPA, and the California Air Resources Board and with all of you… We have totally screwed up. We must fix the cars to prevent this from ever happening again and we have to make this right. This kind of behavior is totally inconsistent with our qualities.”

Shares at VW have plummeted by more than 24% in the last two days, equaling a loss of nearly $20 billion in market valuation.

This article was written by Peter Mondrose from Business2Community and was legally licensed through the NewsCred publisher network.

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