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VW Trims Work, Imposes Limited Hiring Freeze as Scandal Costs Loom

A German VW factory drops a work shift and automaker's financial services division imposes a temporary hiring freeze amid emissions-rigging scandal.
Image: Logo of German carmaker Volkswagen is seen at a VW dealership in Hamburg
The logo of German carmaker Volkswagen is seen at a VW dealership in Hamburg, Germany.FABIAN BIMMER / Reuters

A Volkswagen engine factory said Wednesday it has dropped one shift a week and the company's financial services division imposed a temporary hiring freeze as the world's largest automaker grapples with an emissions-rigging scandal.

The extent of the fallout from the scandal, which erupted Sept. 18 when the U.S. Environmental Protection Agency said VW had cheated on emissions tests of its diesel cars, remains unclear as do the costs to Volkswagen. Longtime CEO Martin Winterkorn quit last week, but said he was aware of no wrongdoing on his part.

In Germany, Stella Pechmann, a spokeswoman for the engine plant in the city of Salzgitter, confirmed a report Wednesday in the Wolfsburger Allgemeine Zeitung daily that a "special shift" is being cut as a precaution because of the current situation. The shift had previously been added to deal with high demand.

Separately, the Volkswagen Financial Services division is freezing new hiring until the end of the year, though spokesman Stefan Voges told news agency dpa that existing hiring agreements are unaffected.

VW's Promised Fix for Diesels Doesn't Apply to U.S. Vehicles: Source

Word of the belt tightening comes as VW braces for costs associated with the cheating scandal to become clear. the automaker faces potential EPA fines of more than $18 billion in the U.S., as well as a criminal investigation. It also is the subject of numerous investigations and potential fines abroad. And a raft of lawsuits have been filed on behalf of purchasers of Volkswagen diesels in the U.S., seeking many millions of dollars in damages.

The scandal has raised concerns that the reputation of German automakers and engineering as a whole could be tarnished, though Finance Minister Wolfgang Schaeuble said he doesn't see the affair damaging Germany as a business location.

"We will emerge from this crisis stronger, too. We learn from crises," he was quoted as saying in an interview with the RedaktionsNetzwerk Deutschland group of newspapers. However, "In the end, VW will no longer be what it was — a lot will change there structurally," he acknowledged.

Matthias Mueller, previously the CEO of the Porsche sports car unit, was appointed Friday to succeed Winterkorn. On Wednesday, Porsche appointed Oliver Blume — responsible for production and logistics at the division since 2013 — as its new chief executive.