Tackling the task of restoring trust
VOLKSWAGEN (VW) faces Germany’s biggest investor lawsuit as attorneys filed complaints totalling €8.2 billion (R127.6bn) related to the diesel emissions scandal that wiped out a third of the company’s market value.
About 1 400 lawsuits were pending at a court in Braunschweig, a judicial spokeswoman said yesterday. Investors said they lost money on VW shares because the company was slow in disclosing the emissions-cheating issue.
Investors have lined up to sue in Germany, where VW shares plunged in the first two trading days after the September 18 disclosure of the emissions scandal by US regulators.
Monday was the first business day after the scandal’s anniversary and investors feared they needed to sue within a year of the firm’s admission to equiping about 11 million vehicles with software to cheat on pollution tests.
More suits The amount was less than the expected €10.7bn based on lawyers’ statements last week, but more suits could trickle in because of uncertainty about the deadline. The court might need about four weeks to register all the complaints, it said.
The US government, which is investigating the firm for possible criminal charges and has not approved a fix for the tainted vehicles, is among the investors suing and its case was valued at €30 million.
VW reiterated its view that it complied with capital-market rules and that the claims were unfounded. VW shares rose 1.2 percent to €119.75 at 12.38pm in Frankfurt. They are still down 11 percent this year.
“The number isn’t ONE YEAR ago, Matthias Mueller took over as Volkswagen’s chief in the wake of the carmaker’s admission that it cheated on emissions tests. Today, he is still battling to overcome the scandal and restore VW’s battered image.
VW car sales have recently started to pick up and the group’s share price has steadied after plunging by more than 40percent in the wake of the revelations that the company had installed software in about 11million diesel vehicles aimed at manipulating emissions tests.
But Mueller still has to steer the firm through a minefield of lawsuits, regulatory probes and recalls – costs of which, analysts say, could add up to €35billion euros (R537bn).
“The various cases could drag on for at least a decade,
surprising. We’ve already seen some of the cases,” said Arndt Ellinghorst, an analyst at Intl Strategy and Investment UK. “It will be difficult for the plaintiffs to prove that VW meaning the actual total cost of the scandal might not be definitely known for 10 years at the earliest,” said Frank Schwope, an analyst with NordLB.
Meanwhile, other companies have been sucked in, including Audi and Bosch, which US lawyers allege helped to design the emissions test-rigging devices.
“Of course there are setbacks,” said Mueller. “Nevertheless, VW has made substantial progress in the last 12 months.”
Mueller has launched a major cost-cutting programme at VW’s core brand and axed its dividend for this year as part of efforts to foot the bills for the scandal. “We cannot turn back time,” he said, adding that VW’s mission was “to do everything to restore lost trust.”
In a bid to head off a showdown acted intentionally here.”
A law firm separately sued Porsche Automobil Holding and VW in a court in Stuttgart on behalf of 263 investors seeking a combined €547m. with VW’s powerful unions over the belt-tightening plans, Mueller was forced earlier this year to agree to a pact setting out plans for investment and protecting jobs.
VW has attempted to cast off the shadow of the emissions scandal with a series of bold moves aimed at underlining the carmaker’s future development plans, including stepping up investment in electric cars. This month it announced moves to boost its foothold in the US heavy-vehicle market by buying a €229million stake in Navistar.
VW insists that it will complete the recall of affected diesel vehicles in Europe by next year. But about half of the 8.5 million cars in Europe fitted with the cheating software still have to be repaired. Porsche owns a majority of VW’s voting stock and is effectively its parent company.
In an interim ruling in previous cases filed in Porsche’s hometown, the court said it
Meanwhile, VW’s legal woes continue to mount. Another two German states said recently that they planned to sue the carmaker for damages as a result of losses from their shares in the group since the scandal broke. Hesse and Baden-Wuerttemberg said they were joining the southern state of Bavaria in launching legal action against VW.
Hesse estimated the loss to its state coffers at about €3.9m, while Baden-Wuerttemberg put its losses at about €400 000.
VW has been able to negotiate a $14.7bn (R204bn) settlement with US car owners caught up in the scandal – but about 85000 cases continue to be contested. There are several other lawsuits also pending in the US. – dpa would review whether to set aside secrecy rules that the firms were invoking as part of their defence, said Andreas Tilp, an attorney for the plaintiff. – Bloomberg