VW sees light at end of tunnel after U.S. emissions deal

Thu Apr 28, 2016 12:34pm EDT
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By Andreas Cremer and Edward Taylor

WOLFSBURG, Germany (Reuters) - Volkswagen (VOWG_p.DE: Quote), battling to rebuild its reputation following a scandal over rigged emissions tests, said on Thursday it could see light at the end of the tunnel following a deal with U.S. authorities last week.

Europe's biggest carmaker said that deal, coupled with cost cutting and a new business plan due later this year, would lay the groundwork for a recovery from last year's record losses.

The German company said it might still face more costs on top of the $18 billion it has already earmarked to cover litigation and vehicle fixes, not least from ongoing investigations by the U.S. Department of Justice.

But executives were visibly more relaxed as they presented detailed 2015 results than when they last faced the press en masse in December, saying there were no plans to sell any group assets and they believed existing provisions were enough.

"We are all agreed that we can make it, that we have potential ... now we have to do our homework, we have to clean up, and then we can go forward again," Chief Financial Officer Frank Witter said.

Chief Executive Matthias Mueller said he had personally apologised to U.S. President Barack Obama for the test cheating when he met him at the Hanover Fair industry trade show this week, and that the company could look with confidence to future conversations with U.S. authorities.

Analysts said there were big challenges ahead, as Volkswagen strives to cut costs at its underperforming VW brand in the face of union opposition, and reform a highly centralised company structure blamed for lax controls and delays to new models.

There will also be the results of an investigation by U.S. law firm Jones Day into who was responsible for, and who knew about, the test cheating.   Continued...

Volkswagen CEO Matthias Mueller (4th L) attends the annual news conference in front of a slide with e-mobility solutions in Wolfsburg, Germany, April 28, 2016.    REUTERS/Fabrizio Bensch