US sues VW for up to US$90b in scandal
Print Edition
The US Justice Department has sued Volkswagen for up to US$90 billion for allegedly violating environmental laws 鈥 five times regulators鈥 initial estimate and a reminder of the carmaker鈥檚 problems nearly four months after its emissions scandal broke.
Although such US lawsuits are typically settled at a fraction of the theoretical maximum penalty, analysts said the size of the claim meant Volkswagen could face a larger bill than previously anticipated.
鈥淭he announcement serves as a reminder/reality check of VW鈥檚 still unresolved emissions issues,鈥 Goldman Sachs analysts wrote in a note, maintaining their 鈥渟ell鈥 recommendation on the stock.
VW shares fell as much as 6 percent to a six-week low in early trade yesterday, the biggest drop on Germany鈥檚 blue-chip DAX index.
The civil lawsuit, announced on Monday, reflects the growing number of allegations against VW since the German company admitted in September to installing devices to cheat emissions tests in several 2.0-liter diesel vehicle models.
VW could face fines of as much as US$37,500 per vehicle for each of four violations of the law, based on the complaint, which says illegal devices to impair emission control systems were installed in nearly 600,000 vehicles in the US.
In September, US regulators initially said Europe鈥檚 biggest carmaker could face fines in excess of US$18 billion.
The lawsuit had been expected, and analysts believe any fine will be far below the theoretical maximum. Although US authorities sued Toyota for up to US$58 billion for environmental violations around the turn of the century, they agreed a settlement that cost the Japanese carmaker about US$34 million.
Equinet analyst Holger Schmidt cut his rating on VW shares to 鈥渞educe鈥 from 鈥渘eutral.鈥
鈥淲e continue to believe that no one is able to make anything else than a wild guess on potential fines,鈥 he said.
During December, VW鈥檚 shares had been recovering as the carmaker unveiled incrementally positive news such as simple fixes for about 8.5 million affected cars in Europe.
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