VW's Audi Unit Settles Munich Diesel Probe for $926 Million
(Bloomberg) -- Volkswagen AG’s Audi unit agreed to pay an 800 million-euro ($926 million) fine for its role in the diesel-cheating scandal that has disrupted the car industry for more than three years and landed Audi’s longtime leader in jail.
The penalty consists of the maximum fine of 5 million euros and the seizure of 795 million euros in profits the company made selling rigged engines, Munich prosecutors said in a statement. As part of the deal, Audi admitted that it had deviated from regulatory requirements.
The settlement closes another chapter in the long-running probe of Volkswagen’s steps to circumvent diesel emissions regulations, uncovered in 2015. Volkswagen in June agreed to a similar deal with Braunschweig prosecutors, agreeing to pay 1 billion euros. Neither settlement has any effect on civil suits against the carmaker or three probes into individual executives.
“We view the fine at Audi as manageable and incrementally positive as it removes another leg of legacy uncertainty at VW," Evercore ISI analyst Arndt Ellinghorst, who rates the stock as outperforming, wrote in a note to clients.
Volkswagen shares rose 3 percent at 11:42 a.m. in Frankfurt, even as both Audi and its parent said the fine would hurt their financial performance this year. The stock is down 11 percent this year.
Stadler in Custody
Former Audi Chief Executive Officer Rupert Stadler has been in custody since June after allegedly tampering with a witness in the Munich investigation. Braunschweig prosecutors are currently also weighing whether to charge VW managers involved in the scandal.
The seizure of profits in Tuesday’s settlement includes sales from 2004 to 2018 in Europe and the U.S. as well as savings Audi made by not equipping its car with technology compliant with the rules, according to prosecutors. The settlement covers V6 and V8 engines used by Audi, VW and Porsche as well as two other Volkswagen motors.
"Following thorough examination, Audi accepted the fine and it will not
lodge an appeal " the company said. "Audi AG admits its responsibility for the deviations from regulatory requirements."
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