Costly absolution

Audi pays €800 million fine to settle Dieselgate probe

audi dieselgate fines settlement
Cleaning house. Source: Reuters

Volkswagen Group, the world’s largest carmaker, closed another chapter in the long-running Dieselgate saga: Its subsidiary Audi agreed to a €800 million ($927 million) fine to end Munich prosecutors’ investigation into Audi’s manipulation of diesel emissions.

VW’s rigged diesel engines not only ended up in its namesake cars, but also in those of subsidiaries Audi, Porsche and Skoda. The fraud, revealed by US regulators in September 2015, is based on engine software first developed by Audi engineers in 1999. Audi’s former CEO Rupert Stadler has been in jail since mid-June as prosecutors investigate his role in the scandal; he was fired earlier this month.

Almost 5 million diesel vehicles contained manipulated engines made by Audi or VW and were sold in the European, US and other markets between 2004 and 2018, said the Munich prosecutors’ office. A total of 11 million vehicles worldwide complied with emissions legislation during tests, but carried software that shut off or reduced emissions cleansing on the road, increasing air pollution.

The €800 million fine is the second for VW and its subsidiaries in Germany, but it is not likely to be the last. In June, the VW Group agreed to pay €1 billion for bringing manipulating diesel cars on the road, the highest corporate fine ever in Germany. The carmaker already agreed to pay up to $23.6 billion in the US and Canada to settle investigations in 2016 and 2017.

Prosecutors in Stuttgart are still investigating Porsche Holding, the family vehicle controlling VW Group, as well as the carmaker itself for possibly violating shareholder disclosure laws. Investors also want €9 billion to compensate for the stock slump after the scandal was revealed in 2015 and have sued the holding and VW. Consumer groups also want to sue VW.

“The risks from additional penalties worldwide as well as investor and consumer group lawsuits we estimate at €10 billion to €20 billion for the VW Group,” Frank Schwope, analyst at Nord/LB bank, wrote in a note.

Audi, VW and Porsche Holding warned the new fine would affect earnings, but Mr. Schwope said the VW Group could still achieve record numbers in terms of unit sales, revenue and results, without specifying the latter.

The investigations against 20 individuals, including former CEO Stadler, will continue, the Munich prosecutors’ office said. VW Group CEO Herbert Diess and non-executive Chairman Hans Dieter Pötsch also face investigations into whether they violated shareholder disclosure laws.

Gilbert Kreijger is an editor with Handelsblatt Global. Handelsblatt reporters Tobias Döring and Franz Hubrik contributed to this article. To contact the author: kreijger@handelsblatt.com

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