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VW faces billion in fines as U.S. sues

Wednesday, January 06, 2016 - 01:25

Volkswagen shares have fallen again after the U.S. Justice Department filed a civil suit against the German auto maker for allegedly violating the Clean Air Act by installing illegal devices to impair emission control systems in 600,000 vehicles. As Hayley Platt reports, the allegations carry penalties that could cost Volkswagen billions of dollars.

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++++EDITORS PLEASE NOTE, REFEEDING WITH AMENDED FIGURES++++ A new year for Volkswagen but the same old problems. The U.S. Justice Department has filed a civil lawsuit against the German auto maker under the Clean Air Act. It alleges VW fitted nearly 500,000 diesel vehicles with devices to cheat emissions tests. It leaves the firm facing possible fines of $48 billion. Darren Sinden from Admiral Markets says they'll find it hard to defend the charges. (SOUNDBITE) (English) ADMIRAL MARKETS, MARKET COMMENTATOR, DARREN SINDEN, SAYING: "They've admitted that they were wrong now it's down to them really to try and pay the least amount of money that's acceptable to the US authorities. I imagine that they'll be amenable to some kind of negotiation but it will be a tricky time for Volkswagen." The Justice Department has also been investigating criminal fraud allegations for misleading U.S. consumers and regulators. But that requires proof of intentional deception at VW. There could also potentially be claims from U.S. customers too. It all leaves VW with major challenges ahead. (SOUNDBITE) (English) ADMIRAL MARKETS, MARKET COMMENTATOR, DARREN SINDEN, SAYING: "If they do get stuck with a large fine, it wouldn't surprise me if the group had to break up and maybe brands like Audi and perhaps even Porsche could be spun out partially floated along the lines of say Fiat recently spinning out Ferrari, so a more streamlined business." VW shares fell six per cent after the announcement, increasing pressure on senior managers. Some analysts say heads could role in 2016.

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VW faces billion in fines as U.S. sues

Wednesday, January 06, 2016 - 01:25