Volkswagen says will foot tax bill for carbon emissions blunder

Fri Nov 6, 2015 7:15pm EST
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By Jan Schwartz and Barbara Lewis

(Reuters) - The multi-billion-euro costs facing Volkswagen (VOWG_p.DE: Quote) rose on Friday when the German carmaker said it would foot the bill for extra taxes incurred by drivers because it understated the carbon dioxide emissions of about 800,000 cars in Europe.

VW's ability to push through its plans to make big spending cuts to pay for the emissions scandal was challenged by its works council, signaling an internal battle is looming at a company already assailed by regulators, investors and customers.

The crisis, which erupted in September when Volkswagen admitted it had rigged U.S. tests for nitrogen oxide emissions, deepened this week when it said it had also understated the carbon dioxide emissions and fuel consumption of vehicles in Europe.

In a letter to European Union finance ministers on Friday that was seen by Reuters, Chief Executive Matthias Mueller asked countries to charge VW rather than motorists for any extra taxes incurred in places where taxes were related to fuel usage or CO2 emissions.

Some analysts have said that Volkswagen, Europe's biggest carmaker, could face a bill as high as 35 billion euros ($38 billion) for fines, lawsuits and vehicle refits in the biggest business crisis in its 78-year history.

To help meet some of those costs, VW has announced a 1- billion-euro program of spending cuts.

The head of its powerful works council said the announcement of the cuts had broken strict rules in Germany on consultation with workers, and demanded immediate talks with company bosses.

"Management is announcing savings measures unilaterally and without any foundation," works council chief Bernd Osterloh said in an emailed statement.   Continued...

The VW logo is pictured on a wheel of a Volkswagen car at a car shop in Bad Honnef near Bonn, Germany, November 4, 2015.  REUTERS/Wolfgang Rattay