VW TO PAY €1b DIESEL FINE
Further steps are necessary to gradually restore trust again, says CEO
VOLKSWAGEN AG (VW) will pay a €1 billion (RM4.71 billion) fine imposed by German prosecutors for cheating to get around diesel-emissions regulations, closing one chapter in a three-year-old crisis even as new developments arise.
The world’s biggest carmaker accepted the fine and took responsibility for its actions, it said on Wednesday in a regulatory filing.
The settlement of the criminal case would have a positive impact on other proceedings in Europe, said the company.
“We work with vigor on dealing with our past,” said VW chief executive officer Herbert Diess in a separate statement.
“Further steps are necessary to gradually restore trust again in the company and the industry.”
VW still faces a multitude of probes both in Germany and abroad, with legal proceedings in 55 countries pending and investigations into market manipulation in Germany.
Investors have accused the company of informing markets too late about the probe, a view the company has contested, saying it couldn’t have known the issue would balloon as it did.
The new fine comes on top of the €25.8 billion in provisions related to rigged engine-control software that the company has already set aside.
It will add another €1 billion to the diesel-related cash outflow of about €4 billion that VW had anticipated for this year. VW had net cash of about €24 billion at the end of the first quarter, providing a substantial liquidity buffer to digest the impact.
The rigging of as many as 11 million diesel cars worldwide was uncovered by United States authorities in September 2015 and triggered the deepest crisis in the manufacturer’s history.
“The fact that the criminal risk has now been dealt with is good news,” said Arndt Ellinghorst, an analyst with Evercore ISI.
“Paying out €1 billion is extremely painful, but in the broader context it isn’t a material number.”
Volkswagen still faces a multitude of probes both in Germany and abroad, with legal proceedings in 55 countries pending and investigations into market manipulation in Germany.