BERLIN (Reuters) -- The steps needed to fix about 8.5 million Volkswagen cars in Europe equipped with illegal emissions-control software are technically and financially manageable, the German automaker's CEO said.
Analysts have said the costs of fines, lawsuits and vehicle refits caused by VW's rigging of diesel emissions tests could top 40 billion euros ($42 billion).
"The efforts [needed] to carry out the refits are technically, mechanically and financially manageable," CEO Matthias Mueller said Monday in a speech to managers at the company's Wolfsburg headquarters. "This is a good development."
VW has set aside 6.7 billion euros to help cover the costs of the diesel recalls and another 2 billion for compensation payments related to its manipulations of carbon dioxide emission levels.
Europe's largest automaker has the approval of Germany's motor authority, the KBA, for fixes for about 70 percent of the affected cars, including models with 1.6- and 2.0-liter engines, Mueller said, adding technical solutions for 1.2-liter vehicles will be presented by the end of the month.
The 1.2-liter diesel likely only needs a software update, Mueller said in the text of a speech to managers seen by Reuters and Bloomberg.
The repair for the 1.6-liter engine is less complex than initially suspected. In addition to upgraded software, the cars will need "relatively simple changes" to the air-filter system, according to the CEO. "Our assumption that substantive changes to the motor would be necessary have not come true," Mueller said in the speech. He didn't comment on what affect the fixes may have on the vehicles' acceleration and fuel economy.
Because the simpler fix approved by the KBA applies throughout Europe, the recall may cost 10 billion euros instead of 16 billion euros, said Stuart Pearson, a London-based analyst with Exane BNP Paribas. "VW is far from out of the woods yet, however," Pearson wrote in a note to investors Tuesday, citing potential for customer compensation payouts and class-action lawsuits.
Mueller warned clearing up the emissions scandal would still take several months, though VW plans to publish intermediate results of the investigation next month.
"Investigations are running at full speed," the CEO said. "To avoid raising false expectations, we are talking about very complex processes which in part date back a long time."
VW is facing a scandal on three fronts: the cheating software installed in about 11 million vehicles worldwide with 1.2-, 1.6- and 2.0-liter diesel engines; irregular carbon-dioxide ratings on about 800,000 vehicles; and questionable software in 85,000 larger diesel engines targeted in the latest probe by U.S. regulators.
Bloomberg contributed to this report
