Three years after the emission cheating scandal rocked the auto industry, Volkswagen subsidiary Audi has now agreed to settle a regulatory probe by paying $926 million fine in Germany. With the latest settlement, the total cost of the dieselgate scandal has been lifted to $32.7 billion globally.
Audi said it does not plan to appeal against the fine, which was slapped due to a discrepancy in regulatory requirements of certain V6 and V8 diesel motors and diesel vehicles. The fine is expected to hurt Volkswagen’s earnings directly and lower the group earnings for fiscal 2018.
Volkswagen has admitted to cheating emission tests using a software known as defeat devices. It is expected that the impacted vehicles will rise to about 482,000 in the US and an additional 11 million around the world.
The total scandal cost, which equals 12% of the company’s annual sales in the previous year, is expected to mount due to the large amounts of pending lawsuits with damage claims of over $10.4 billion.
In September 2015, emission test violations were first unearthed by the US Environmental Protection Agency (EPA). This resulted in $29 billion in losses due to nearly a 40% dip in the company’s stock. Since then, about $30 billion has been spent by Volkswagen in the form of settlement, product recalls and penalties.
The company has already experienced a loss of credibility and customer confidence around the globe due to the emission debacle. Volkswagen had earlier this year tried to put things back on track by appointing Herbert Diess as the CEO.
The litigation is predicted to take over a year for final judgment due to the magnitude of the issue. If the judgment is negative, it could dent Volkswagen’s balance sheet, and in turn other strategic plans for the next few years.