Confirming developments in Dieselgate.
For VW, it is indeed a shit storm (perfectly good German word).
First, Bild reports that the German Department of Motor Vehicles has told VW that they have to present a binding plan on how they will fix the emissions problem in the 2.8 million VW diesels on the road in Germany by October 7. If not, the government will cancel permission for those autos to be operated on the road in Germany. It is estimated it will cost between 100 to 200 Euro to bring each auto into compliance, but of course, there will likely be a mileage and performance cost. That will be left to the lawyers.
Second, the Times of London reports that the European Central Bank at this time will accept no further asset backed securities from VW in its quantitative easing bond buying program. The assets are, of course, credits for car purchases. The ECB wants to mull over if VW's credit is good enough to keep it in the program. That will kick the cost of credit for VW toward Greeceland. The market risk is, as Brian pointed out, larger than anybunny can calculate
Third, the Frankfurther Allgemeine am Sonntag brings word that, in 2011, an engineer had attempted to inform management they had a small problem with illegal software running the diesels that were being sold (these motors were introduced in 2009 and sold until 2014). This warning was dug out and presented to the VW board on Friday although the FAS did not know who saw the letter and why it was ignored (stay tuned)
Fourth, while Martin Winterkorn remains on the Porsche Board, it is pretty clear that he will not remain long, and moves are afoot to tell him to go blow on a straw if he tries to claim the money due him according to his contract.
Fifth (added Monday) the State's Attorney in Braunschweig (nearest city to Wolfsburg) has opened a case against Martin Winterkorn for dishonestly allowing cars to be sold whose emission records were falsified (hey, its German). This follows the complaint forwarded to the State's Attorney's office by VW which named no names.
And to all a good night