VW May Set Up Special Shops to Handle Diesel Recall Repairs

Volkswagen AG CEO Matthias Mueller tells the Frankfurter Allgemeine the company is studying a plan to set up special repair facilities to fix diesels being recalled because they can’t meet government emission standards.

VW admits it sold 11 million such vehicles equipped with software to cheat on pollution tests. The company says a relatively simple software update can bring some of those cars into compliance. But analysts have estimated perhaps 6 million of them must be retrofitted with more sophisticated emission controls that could cost thousands of dollars per car.

Setting up special service centers dedicated specifically to performing the latter upgrades could reduce the cost. Unlike most recalls, where existing parts are replaced with new ones, VW’s diesel updates will involve completely new hardware—and the challenges of finding places to put it.

VW has budgeted €6.5 billion ($7.2 billion) for the recalls. But analysts say the real cost is likely to be three or four times that amount when regulatory fines and the settlement of hundreds of lawsuits are included.