VW TO PAY €1b DIESEL FINE

Fur­ther steps are nec­es­sary to grad­u­ally re­store trust again, says CEO

New Straits Times - - BUSINESS -

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.”

REUTERS PIC

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.

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