Germany fines Volkswagen €1 billion over dieselgate

Germany fines Volkswagen €1 billion over dieselgate

Volkswagen has been fined €1bn (£880m) over diesel emissions cheating in what amounts to one of the highest ever fines imposed by German authorities against a company.

The 1 billion fine does however end regulatory offence proceedings against Volkswagen, which the Wolfsburg-based carmaker said it assumed would help to settle further administrative proceedings against VW in Europe.

"We must plan for interruptions to production in the third quarter", VW chief executive Herbert Diess told workers. "Further steps are necessary to gradually restore trust again in the company and the auto industry".

The diesel scandal first became public in the United States three years ago after regulators discovered that Volkswagen diesel vehicles were emitting significantly more nitrogen oxide (NOx) while on the road than the legal limit. 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 company has since paid out over $7 billion to compensate customers in the US. It will add another 1 billion euros to the diesel-related cash outflow of about 4 billion euros that VW had anticipated for this year.

Analysts at Evercore ISI said the fine would likely help end all criminal investigations against VW in Europe, but would not settle shareholder lawsuits.

Prosecutors concluded that Volkswagen failed to properly oversee the activity of its engine development department, resulting in some 10.7 million diesel vehicles with illegal emissions-controlling software being sold worldwide. "Paying out 1 billion euros is extremely painful but in the broader context it isn't a material number".

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