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Prosecutors in Germany have whacked Volkswagen with a 1 billion Euro fine while a court has ruled a VW dealer must buy back a 2012 Passat TDI even though the statute of limitations has expired.


German Prosecutors Hit VW With €1 Billion Fine, Court Rules Company Must Take Cars Back

Prosecutors in Germany have whacked Volkswagen with a 1 billion Euro fine while a court has ruled a VW dealer must buy back a 2012 Passat TDI even though the statute of limitations has expired.

€1 Billion Fine Levied

Things are going from bad to worse for Volkswagen, which cannot seem to find a way out of the legal thicket it created with its diesel cheating software. The prosecutor’s office in the city of Braunschweig, which is located in the state of Lower Saxony, imposed a fine of €1 billion against VW on Wednesday, according to Reuters. It results from the company’s failure to prevent “impermissible software functions” from being installed on 10.7 million cars between 2007 and 2015.

volkswagen diesel The fine does not address civil claims remaining against the company, according to the prosecutor’s office. It does end regulatory proceedings against Volkswagen in Germany, however, which the company says should help it to settle further administrative proceedings pending against it throughout Europe.

In a statement to the press, the company said, “Following a thorough examination, Volkswagen AG accepted the fine and it will not lodge an appeal against it. Volkswagen AG, by doing so, admits its responsibility for the diesel crisis and considers this as a further major step toward the latter being overcome.”

Shareholders shrugged off the news. Volkswagen shares rose 0.1% following the announcement. “Paying out 1 billion euros is extremely painful but in the broader context it isn’t a material number,” Evercore ISI analyst Arndt Ellinghorst tells Reuters. He points out that Volkswagen had a net cash position of €24.3 billion at the end of the first quarter of this year.

Dealer Must Take Back Non-Conforming Diesel Car

But wait. It gets worse. A court in the Bavarian city of Augsburg has ruled a Volkswagen dealer must take back a 2012 Volkswagen Passat TDI and refund the original purchase price minus a sum for the use of the vehicle according to a report by German newspaper Handlesblatt. The amount the owner gets from the dealer will likely be in far in excess of the price the owner could get from a private buyer.

The dealer claimed the 3-year statute of limitations had long since expired, but the court found the statutory period did not begin to run until the owner became aware the car was out of compliance with applicable regulations. Volkswagen notified the owner by mail in February, 2016, so the claim period does not expire until 2019.

The judge ruled the car in question did not have a valid declaration of conformity at the time of purchase. Such a declaration is required for every vehicle sold in the EU according to applicable regulations. “This is only valid if the vehicle for which it is issued actually corresponds to the approved type. However, this is not the situation in the present case,” said the judge.

The ruling could open the floodgates, exposing Volkswagen to billions more in claims if other courts follow the example set by the judge in Augsburg. Potentially, Volkswagen might have to buy back millions of other cars if this court case establishes a binding precedent.

V Dub Execs Under A Cloud

And the hits just keep on coming. In Munich this week, prosecutors expanded their probe into VW diesel emissions cheating to include Rupert Stadler, CEO of Audi, which is a division of VW Group, according to a Reuters report. Prosecutors in Braunschweig are also looking into whether Herbert Diess, the new head of Volkswagen, and VW Group chairman Hans Dieter Poetsch are guilty of market manipulation. If they lied about the scandal, those untrue statements might have had an impact on VW’s stock price. Authorities in Stuttgart are also investigating Poetsch for the same alleged misconduct.

And it’s not only Volkswagen that has gotten attention from authorities because of alleged improprieties involving diesel emissions. The German government last week ordered Daimler to recall nearly 240,000 cars fitted with illegal emission control devices, part of more than 774,000 models affected in Europe as a whole.

Diesel Dying A Slow And Painful Death

Europe’s love affair with the diesel engine is under extreme stress. Sales of diesel-powered cars are off as much as 40% in some markets and the price of used diesels has collapsed as cities all across the continent float proposals to ban diesel-powered cars entirely. All of the weight coming down on the car makers masks the strong support they got from governments at all levels to build diesel cars. There is more than enough blame to go around for this never ending mess of corporate greed and corruption.

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Steve writes about the interface between technology and sustainability from his home in Florida or anywhere else The Force may lead him. 3000 years ago, Socrates said, "The secret to change is to focus all of your energy not on fighting the old but on building the new." Perhaps it's time we listened?


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