Source: Alan Katz: propertycasualty360.com

Volkswagen AG’s worldwide repair of 11 million diesel vehicles to bring their emissions systems into compliance with pollution regulations is shaping up to be one of the most complex and costly fixes in automotive history.

The German carmaker will need to install parts for vehicles already on the road that weren’t designed to accommodate the equipment. The work may may need to be done in special shops set up for the purpose. And it will have to pass muster with dozens of countries with their own regulations. VW said Thursday that it was examining whether other diesel engines also have the cheating software.

“I can’t think of any other recall that would be as comprehensive,” said Jake Fisher, director of automotive testing at Consumer Reports magazine. “It’s really an expensive rework.”

The repair costs are only part of what Volkswagen is going to have to spend to get through a corporate crisis sparked by revelations it rigged its diesel cars for years to fool emissions tests. The company is also compensating dealers for storing cars they can’t sell. It faces more than 325 consumer lawsuits in the U.S., according to data compiled by Bloomberg, and has hired U.S. law firm Jones Day to conduct an internal investigation into the company’s actions.

Adding in likely fines, settlements with the U.S. Environmental Protection Agency, state authorities, the Justice Department and dozens of countries in Europe, and the cost could exceed 30 billion euros ($34 billion), according to the Center of Automotive Management in Bergisch Gladbach, Germany.

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