Dieselgate: Audi hit with $A1.3b fine in Germany

AUDI AG has accepted an €800 million ($A1.3 billion) fine from the Munich public prosecutor in Germany over its involvement in the ‘dieselgate’ emissions-cheating saga that continues to impact its parent company, Volkswagen Group.

 

The administrative order issued against Audi AG is due to emissions-related regulatory offences an internal investigation found it committed with certain turbo-diesel V6 and V8 engines manufactured for Volkswagen Group models.

 

In a statement, Audi AG said: “Following thorough examination, Audi AG accepted the fine, and it will not lodge an appeal against it. By doing so, Audi AG admits its responsibility for the deviations from regulatory requirements.”

 

The fine consists of two parts: the maximum penalty for negligent regulatory offenses (€5 million, or $A8.1 million) and €795 million ($A1.29 billion) for the economic benefits of cheating laboratory emissions tests.

 

As a result, Audi AG will be forced to lower its major financial key performance indicators (KPIs) that were forecast for the 2018 fiscal year.

 

While this move brings regulatory proceedings against Audi AG to an end, it and Volkswagen Group are still facing criminal and civil legal action outside of Germany.

 

In June this year, a similar fine was issued to Volkswagen Group by the Braunschweig public prosecutor in Germany, but it instead totalled €1 billion ($A1.62 billion).

 

Volkswagen Group’s penalty was related to its fitment of what it described as “an impermissible software function” in its EA288 Gen3 and EA189 turbo-diesel engines that were sold in the North American and international markets respectively from 2004 to 2018.

 

Given that these two engines were used in Audi AG models, the Munich public prosecutor also criticised the company for failing to discover this additional regulatory offence.

 

Audi AG announced in May this year that it had found “engine management irregularities” in about 60,000 examples of its fourth-generation A6 and first-generation A7 models sold in Europe with the Gen2 evo 3.0-litre turbo-diesel V6.

 

Meanwhile, Audi AG chairman of the board of management Rupert Stadler earlier this month agreed to leave the company to focus on his legal defense, having been in pre-trial detention since June over his alleged role in the scandal.

 

At the time of the raid of Mr Stadler’s private home and his subsequent arrest, the Munich public prosecutor was fearful that he might tamper with evidence by influencing dieselgate witnesses.

 

It was also alleged that Mr Stadler committed fraud and falsified public documents regarding the sale of turbo-diesel vehicles in Europe.

 

While Volkswagen Group has not released the terms of its agreement with Mr Stadler, it revealed that “the contractual execution depends on the course and outcome of the criminal proceedings”.

 

As reported, Audi AG member of the board of management for marketing and sales Bram Schot was quickly promoted to Mr Stadler’s former role on an interim basis following his arrest.

 

However, former BMW Group board of management member for purchasing and supplier network Markus Duesmann will reportedly become the next full-time Audi AG chairman of the board of management when his previous employer’s non-compete clause eventually expires.