If something goes catastrophically wrong with Volkswagen Group’s recent $21 billion loan, brands like Bentley or Lamborghini could hit the auction block. According to two insiders to Reuters, the beleaguered German automaker agrees with its creditors to sell assets if the company somehow can’t pay back the debt in a year.
One of these anonymous people claimed the company hasn’t yet deliberated over what to sell. However, the sources were willing to speculate that the power-engineering portion could be among the first to go. “Volkswagen may also consider divesting luxury car brands Bentley and Lamborghini or motor bike brand Ducati, although these units don’t really move the needle,” an insider said to Reuters.
VW Group negotiated with the banks earlier to get the massive loan. The cash is necessary as a buffer in case the automaker doesn’t have enough money on hand to repair vehicles or settle upcoming fines. VW would reportedly issue bonds in the spring to begin paying the debt.
The company’s bills will start racking up quickly early next year. German authorities mandate a recall there in early 2016, and repair campaigns in the US for the 2.0- and 3.0-liter diesel engines are inevitable. There are also hundreds of class-action lawsuits to settle. The company needs to resolve its CO2 emissions scandal in Europe, too.
In response to these financial threats, VW management created a cost-cutting plan to slash the research and development budget by $1.1 billion next year.