VW diesel scandal – is it massive enough to have brands killed off? image

Last month Volkswagen Ag, the largest European automaker, admitted it had cheated on diesel emissions tests in the US and actually fitted with illegal software up to 11 million autos around the world.

The revelation has sparked increased regulatory scrutiny all over the world for the carmaker and analysts and industry experts believe the costs could reach as much as 35 billion euros ($40 billion). Now voices are raising an interesting question – in the face of such massive spending, is the 12-brand empire going to stay the same or will it be overhauled. The giant company has been created during the past two decades and now produces anything from affordable cars to motorbikes and heavy trucks, with the aim to become the world’s largest automaker by sales. In the past, the marquees that were not posting a profit – such as Spanish subsidiary Seat, ultra-luxury nameplate Bugatti or the MAN heavy trucks unit with the massive earnings from nameplates such as VW, Audi and Porsche – in the near future the money would need to flow in another direction: covering the costs of the largest business crisis in its 78-year history.

“VW has several brands that fall into the ‘nice to have’ category,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “Bugatti, Lamborghini, Ducati too — they’re not core to the company in terms of making money.” The new chief executive officer, Matthias Mueller, has already said the company would delay or cutting all non-essential programs and the core VW brand would need to further limit spending by another one billion euros per year on top of the ongoing program.

Via Bloomberg