Volkswagen slapped with new $3bn penalty over diesel emissions scandal

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The $2.9 billion third-quarter charge for the USA diesel scandal was attributed to a higher-than-expected cost of fixing the cars.

The scandal came to light in September 2015, when the company admitted some 11 million of its diesel vehicles world-wide were equipped with software that allowed them to sidestep emissions testing.

While it's likely that VW is hoping for some good press after the diesel cheating scandal of two years ago, company headquarters in Germany issued a terse, two-sentence press release Friday announcing that the company will take a third-quarter charge of €2.5 billion ($2.9 billion) to boost its provision for North American buyback/retrofit programs related to the diesel scandal.

The German automaker said today that it is increasing provisions for a buyback and retrofitting program for 2-liter TDI vehicles that was part of settlements over its diesel emissions scandal.

"We have to work more on the hardware", he said.

Every company runs into unexpected costs, but a surprise $3 billion (yes, billion) hit isn't something you see every day.

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German police arrested the former chief of engine development on Wednesday in connection with the vehicle maker's attempt to rig diesel-powered automobiles to deceive emissions testing.

German media claim the person is Wolfgang Hatz, who stepped down from his post on Porsche's management board previous year after being suspended over the "dieselgate" investigation.

Hatz was Audi's head engine developer from 2001 until 2007 when he was promoted to VW Group powertrain chief. He was suspended after the diesel emissions test-cheating was exposed. One man has so far been jailed in connection with the scandal: Volkswagen engineer James Liang received a 40 month sentence in a USA court last month.

At the Frankfurt motor show earlier this month, Volkswagen outlined plans to move away from combustion engines with electrified variants of all 300 models in the 12-brand group's lineup.

The additional costs will be reflected in VW's third quarter results, which will be reported next month. Facing threats of a ban on diesel cars by German cities under pressure to reduce pollution, Volkswagen and other auto makers are offering up to EUR10,000 in discounts on a new auto for customers who trade in old diesel vehicles.

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