Volkswagen has secured a loan of 20 billion Euros from 13 banks and will have to divest its luxury brands if the company is unable to repay the same to the lenders.
The dieselgate scandal has hit Volkswagen hard with the company financially in the doldrums with fines and penalties only increasing on a global level. The automaker’s financial liabilities could see the company take some dramatic measures in order to raise funds and could end up divesting brands like Bentley, Lamborghini and Ducati in order to repay its one-year line of credit. The automaker has been in talks with banks for procuring loans and is in a desperate need to work back its reputation.
Volkswagen is currently securing a loan of 20 billion Euros from 13 banks and will be issuing bonds over the next couple of months. The company also stated that it would sell assets if it finds no other way of repaying the loan. The automaker’s commercial arm MAN that manufactures trucks, engines, mini powerplants and much more is also said to be at the top of the list of potential divestments being valued at 4-5 billion Euros.
Compared to the more volume-centric brands like Seat and Skoda, the luxury brands see limited production numbers and hence would be relatively easier for the manufacturer to let go off from its stable. This does emerge as a big blow to the automaker as well as the luxury brand but is a necessity in order to regain control of the dwindling situation. This is Volkswagen’s biggest corporate scandal in its 78-year-old existence and saw the automaker’s sales nosedive quite immediate on a global level.
Moreover, the scandal has attracted over 500 lawsuits in the US alone against brands Volkswagen, Audi and Porsche since the company admitted to the emission manipulation in September this year. After an initial estimate of 11 million vehicles fitted with cheat devices, the automaker recently conveyed that the actually affected cars are likely to be below 8,00,000 units. The company expects costs of around 2 billion Euros from the issue.