VW to freeze promotions due to emissions scandal: report

Sat Oct 24, 2015 11:35am EDT
 
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FRANKFURT/BERLIN (Reuters) - Volkswagen (VOWG_p.DE: Quote) will freeze managerial promotions next year at its VW division as part of a savings drive to help meet more than 30 billion euros of costs arising from the diesel emissions tests scandal, a German business magazine said on Saturday.

The German company also plans to re-use as many parts as possible in the next generation of its popular Golf model to save hundreds of millions of euros, according to the Manager Magazin report, which cited Volkswagen sources.

Europe's largest carmaker is battling the biggest business crisis in its 78-year history after admitting last month it installed software in diesel vehicles to deceive U.S. regulators about the true level of their toxic emissions.

The company has already set aside 6.5 billion euros ($7.2 billion) in provisions in the third quarter to pay for fallout from the scandal. Manager Magazin said Volkswagen now saw the total cost swelling to more than 30 billion euros.

Analysts expect Volkswagen to report a 3.5 billion euro operating loss for the third quarter when it publishes its financial results on Wednesday, down from a year-earlier profit of 3.2 billion.

Works council chief Bernd Osterloh rejected the idea of a halt to promotions, saying such a move would be "merely symbolic" and at the expense of workers.

"We expect to see other symbols first: for instance, clear statements on management's stance on bonus payments. The motto needs to be to lead by example," he said in an e-mailed statement.

Joerg Hofmann, the new head of Germany's powerful IG Metall union, said workers' representatives must have a bigger say in setting bonuses at VW to help prevent future crises.

"What will the performance-bonus systems be in future at VW?," he told Deutschland funk radio in an interview to be aired on Sunday. "We want to be part of the decision-making on this."   Continued...

 
A Volkswagen logo stands on the roof of the company's headquaters in Wolfsburg, Germany October 7, 2015.