[VeyronSuperSprt]

It was expected but looks like it will be here sooner rather than later.

As the Volkswagen emissions scandal continues to rumble on, it could be set to claim another scalp: Bugatti. Braced to pay almost £5bn towards recalling and fixing millions of cars − and much more in fines and compensation − VW is planning to halt investment in non-core projects, including the iconic supercar brand.

These include a next-generation VW Phaeton, the brand's luxury saloon car, and a replacement for the Bugatti Veyron, which was expected to draw inspiration from the Vision Gran Turismo, shown off just days before the emissions crisis broke. New VW boss Matthias Muller told German media on 6 October that any projects that aren't "absolutely vital" will be cancelled.

Addressing workers at VW's headquarters in Wolfsburg, Muller said: "We will review all planned investments, and what isn't absolutely vital will be cancelled or delayed. I will be completely clear − this won't be painless."

http://www.ibtimes.co.uk/bye-bye-bug...ojects-1522845

[GTO]

Changed the thread title - it's just the media having a field day .

I don't think Bugatti will be sold, at least there is no indication of that. Due to the recent cheating scandal, VW will surely cut down on frivolous expenses (like Bugatti R&D), but this isn't a company known to sell a luxury marque after acquiring one. Bugatti will perhaps be locked up in the attic for a while...only to resurface later.

[VeyronSuperSprt]

Yes, it's possible the media are having a field day.

But on another note, it wouldn't depend completely on the intentions of VW whether Bugatti would be retained but on their financial muscle to pull through this mess. If they can't, then these would be the first to go. The cash cows (read - the most disinteresting ones for an enthusiast) would be the last.

We were providing IT services to another EU biggie that went belly up - known as the "flying bank" - Swissair.

Swissair's Chairman was buying airlines all over the place without going into the sustainability or otherwise of those airlines. It was also known as a company that bought airlines and didn't sell any.

The issue was that this strategy of not selling couldn't see them through the mess and finally all the airlines had to go including the flagship Swissair which was taken over and renamed Swiss.

So it would depend on whether VW has the financial muscle to meet all related costs - repairs, penalties, fines and more importantly compensations expected through various litigations.

My guess is that it could be a long shot.

My wish is that it isn't.

[ajmat]

Originally Posted by VeyronSuperSprt

So it would depend on whether VW has the financial muscle to meet all related costs - repairs, penalties, fines and more importantly compensations expected through various litigations.

My guess is that it could be a long shot.

My wish is that it isn't.

They have set aside $5Billion but the maximum liability will be $ 15 Billion. My guess is that the cash cows - Audi and Porsche will remain. Find a rich Arab to take a trophy stake in Bugatti. The MAn and Scania divisions might get sold depending on the extent of the liability

[GTO]

Originally Posted by VeyronSuperSprt

We were providing IT services to another EU biggie that went belly up - known as the "flying bank" - Swissair.

Swissair's Chairman was buying airlines all over the place without going into the sustainability or otherwise of those airlines. It was also known as a company that bought airlines and didn't sell any.

Can't compare the two situations as VW hasn't gone overboard with capital expenditure. Further, the company has an enormous amount of liquid $$$ that can easily cover the cost of this scandal. It's definitely serious damage, but not life-threatening.

[VeyronSuperSprt]

The major differentiator here is the factor of individual law suits by a large chunk of the 11 million customers. With lawyers offering freebies such as "pay me only if and when you get compensation from VW' , quite a lot of the 11 million should jump onto the "litigation for compensation" bandwagon.

If each of the 11 million were given just $1000 as compensation it would come to $11 billion. If it is $10,000 each, it would come to $110 billion. This is in addition to penalties , fines, repairs and damages that are otherwise payable by VW. So it's probably a bit early to get a fix on what the final compensation amounts would be and it could be far higher than what is being currently envisaged.

Whatever it does turn out to be, lets hope that VW does manage to pay all of it without major damage to their brands.

[GTO]

Originally Posted by VeyronSuperSprt

The major differentiator here is the factor of individual law suits by a large chunk of the 11 million customers. With lawyers offering freebies such as "pay me only if and when you get compensation from VW' , quite a lot of the 11 million should jump onto the "litigation for compensation" bandwagon.

The 'litigation for compensation' is very successful & effective in the USA only. Of the 11 million cars, less than 5% are in the USA.

[VeyronSuperSprt]

True. They've been talking about 500,000 affected cars in the US. Hope that number is more or less accurate.

[Hayek]

Originally Posted by GTO

The 'litigation for compensation' is very successful & effective in the USA only. Of the 11 million cars, less than 5% are in the USA.

Originally Posted by VeyronSuperSprt

True. They've been talking about 500,000 affected cars in the US. Hope that number is more or less accurate.

While only the USA has high consequential and punitive damages, all European countries will require VW to repair the relevant vehicles, and compensate for tangible losses - and will impose fines for environmental damage caused until the vehicles are repaired. So if one assesses US costs of USD 10 k per vehicles, EU costs would very easily be USD 3-4 k per vehicle - which adds up to a lot.

The bigger questions are (1) do their Euro 6 cars meet regulatory requirements; (2) will they meet the new 2017 requirements; and (3) what does this do to the brand premium they have, esp wrt Audi and VW. If people start shifting from Audi to BMW or Mercedes, and reduce the premium VW gets compared to Renault or Opel, the impact of that on free cash flows would be huge.

Agree that stupid projects which should have never existed such as the Phaeton should be the first to go. But brand sales will need to follow. Somehow, I doubt the Truck business will go out - luxury brand sales (Bugatti and may be even Lamborghini), the sale of Ducati, a re IPO of the Porsche car business or a spin back to the Porsche family are all far more likely.

However, I don't see a bankruptcy here - the worst case outcome is a big, deeply discounted rights issue which may see the Porsche Holdings stake drop if it is not able to pony up the cash. From an India perspective, the big risk is that they decide that investing for the domestic market where they have failed to gain traction is not a priority, and hence investment plans to start manufacturing MQB cars or develop the new hybrid platform to upgrade the Vento and Polo get postponed - implying a slow death for VW and Skoda in the mass segment (Aurangabad will keep assembling Audis and the CKD import cars).

[karan561]

"everything will continue as planned."

Relax guys , the latest report suggests the project is ON

Source

[VeyronSuperSprt]

As they say, it isn't over until it is over. It's probably a bit too early to determine what the eventual payouts will be.

Another $46 billion that's been added:

http://www.thisismoney.co.uk/money/markets/article-3278265/Volkswagen-facing-30bn-lawsuit-diesel-emissions-scandal.html

[srishiva]

I think VW should finish the internal inquiry early. There is too much of crap that they need to address which is getting postponed.

Haven't others had scenarios where they overstated the power? Penalties were not that big. Disable the cheat code and have the cars with less power.