Singapore Markets closed

Audi hit with €800m in penalties over diesel emissions scandal

Alan Tovey
Audi diesel engine - AFP

Audi has been fined €800m (£700m) by German prosecutors over “dieselgate” as the emissions scandal which rocked parent Volkswagen Group begins to draw to a close.

The upmarket car maker announced that it had accepted an “administrative order” from Munich public prosecutors that imposed the maximum penalty of €5m for “negligent regulatory offences” relating to emissions put out by vehicles with diesel V6 and V8 engines.

It also accepted a €795m penalty for the economic benefits the business gained from the offending engines, imposed by the prosecutors in Munich, whose jurisdiction covers Audi’s Ingolstadt headquarters.

Audi said that by accepting the administrative order “further important proceedings in connection with deviations from regulatory requirements by Volkswagen Group diesel vehicles will be finally terminated”.

It added the fine will “directly affect” parent VW Group’s earnings, though shares in the company were 2pc higher at €144 shortly after the news emerged.

It was revealed three years ago that as many as 11 million VW Group vehicles had been fitted with “defeat devices” which allowed them to cheat emissions tests.

These devices recognised when pollution being pumped out by the cars was being checked in laboratory conditions and switched on systems to limit them. However, the systems were not in use during normal driving conditions, meaning that some of the company’s cars pumped out 40 times the allowed amount of pollution.

News of the company’s deception send VW Group into crisis, with the shares diving and a wave of legal actions launched.

Audi's former boss Rupert Stadler is the most senior executive at the VW Group to have been arrested over the scandal Credit: AFP

In June Volkswagen paid €1bn in similar administrative penalties to prosecutors in Braunschweig, which have jurisdiction over the company’s Wolfsburg headquarters.

The latest fine, which covers 4.9m Audis sold between 2004 and 2018,  is expected to end proceedings against the company, but does not affect criminal cases against individuals.

Audi chief executive Rupert Stadler was arrested in June over his role in the scandal, the most senior executive in the business to have been taken into custody. Mr Stadler, who was suspended by Audi after his arrested and left the business a fortnight ago, insists he is innocent.

German media reported that while he is not directly implicated in emissions scandal, he is understood to have been aware that Audi cars were still having defeat devices installed after the deception first came to light in 2015.

The German prosecutions of Volkswagen and Audi are the only sizeable penalties imposed on the parent business in Europe.

However, in US the company has paid out $25bn (£19bn) in fines and compensation to settle criminal charges and compensate almost one million affected drivers in America.

Evercore ISI analysts Arndt Ellinghorst said: "This is similar to the €1bn fine issued to VW in June, and we view the fine at Audi as manageable and incrementally positive as it removes another leg of legacy uncertainty at VW, post the diesel scandal."