Dieselgate loan could force VW to sell luxury brands

Volkswagen has reportedly told banks supplying a €20 billion loan to cover dieselgate costs that it would be prepared to sell off luxury brands like Bentley and Lamborghini if there is no other way of meeting repayments.

VW Group has taken out the loan to provide a buffer in case the cost of recalls and legal action resulting from the dieselgate emissions cheating scandal can’t be met from its cash reserves. According to Reuters, sources close to the deal say that VW is willing to sell off assets to cover the cost of the loan, which has to be paid back within a year, if there it has no other means of doing so.

According to Reuters’ sources, the profitable power engineering arm of truck division MAN, which produces marine and power plants, would be first for the chop. Furthermore, one of the sources is quoted saying: “Volkswagen may also consider divesting luxury car brands Bentley and Lamborghini or motorbike brand Ducati, although these units don’t really move the needle.”

All three brands would no doubt have a long queue of willing buyers, but Bentley in particular is pretty intricately woven into the wider workings of VW Group, using a lot of components shared with other cars in the Group, so unpicking it would be tricky to say the least. That may prove off-putting.

The full cost of the dieselgate scandal isn’t yet known and will likely be fluid. A recall of 11 million cars begins in Europe next month which will see a relatively simple fix carried out. What work will be needed on affected cars in America is still not known; some commentators have suggested that there may simply be too much work involved and VW will simply elect to buy the cars back.

Then there are fines to factor in and hundreds of lawsuits to deal with. VW will want to get past the biggest scandal in its 78-year history as quickly as possible, but it will probably rumble on for years to come.

By Only Motors

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