A German court has fined Volkswagen for €1 billion

14 June 2018

The loss of the German company continue to grow

Associated with diesel scandal trouble of Volkswagen AG did not end. Now the court of the German city of Braunschweig has fined automotive giant €1 billion. Manufacturer found guilty of the organization of fraud, which were to hide the excess emission limits of exhaust.

After the last Lower Saxony's court session the representatives of Volkswagen stated that it agreed with the judgment, and do not intend to challenge the fine. Apparently, the company is ready for any action, because now the main goal is the reduction of interest in this inconvenient for the concern issue.

It is noteworthy that from customers Volkswagen has received no complaints, and a substantial part of the "defective" machines were sent to the United States. However, the Prosecutor's office in Braunschweig has decided that the manufacturer should be punished due to the fact that time did not disclose its violations.

The so-called "Deselect" (the name is a reference to the "Watergate" scandal, which led to the impeachment of US President Richard Nixon) began in the fall of 2015. The office for the protection of the environment of the United States (Environmental Protection Agency — EPA) revealed that Volkswagen for several years (2007-2015) has been installed on their diesel cars with special software that allowed to circumvent environmental tests and underestimate the real emissions of harmful substances into the atmosphere. In some cases, the emissions exceeded the permissible norm in 40 times.

The new penalty is one of the largest in the history of Germany. It is no secret that the recovery of €1 billion could bankrupt many of the smaller manufacturers, but not Volkswagen. Moreover the German company has already spent a much larger sum for the settlement of the conflict. According to experts, a few months ago, the total expenses of the company exceeded $26 billion. In the beginning of 2018 Volkswagen agreed to pay US regulators $4.3 billion. The total amount also includes the cost of feedback "defective" vehicles, compensation to buyers, as well as the payment of claims car owners, car dealers, environmental agencies and local authorities.

However, there is no assurance that the new penalty mishaps the German company will end. It is noteworthy that the market has ceased to react to the news about the fines: on Wednesday, shares of Volkswagen AG continued to fluctuate within the same range and even slightly grown. If to speak about more General trends, for the year capitalization of the company increased by approximately 20 %.