US sues VW for at least $20 bn over emissions cheating

New York - The US government sued Volkswagen Monday for installing equipment on nearly 600,000 diesel cars that intentionally subverted clean-air regulations, resulting in excess harmful emissions.

Civil penalties in the lawsuit, filed by the Justice Department on behalf of the Environmental Protection Agency, could run well above $20 billion, according to the suit.

The complaint alleges that the big German automaker intentionally installed "defeat devices" on its diesel VWs, Audis and Porsches that met tough US environmental tests during official reviews, but spewed up to 40 times the legal levels of poisonous pollutants when on the road.

The Justice Department did not specify a specific overall penalty it was seeking.
But it laid out per-car penalties of up to $37,500, and up to $2,750 per defeat device, which could take the cost of the suit for VW to well past $20 billion.

"Car manufacturers that fail to properly certify their cars and that defeat emission control systems breach the public trust, endanger public health and disadvantage competitors," said assistant attorney general John Cruden.

"The United States will pursue all appropriate remedies against Volkswagen to redress the violations of our nation’s clean air laws alleged in the complaint."

Cynthia Giles, assistant administrator for enforcement and compliance assurance at EPA, said the lawsuit would hold Volkswagen accountable and set the case on a "path to resolution."

"So far, recall discussions with the company have not produced an acceptable way forward," Giles said. "These discussions will continue in parallel with the federal court action."  — Agence France-Presse

source: gmanetwork.com

S&P cuts Volkswagen's credit rating after scandal

PARIS, France - The international credit rating agency Standard and Poor's on Monday cut the long-term debt rating of German auto giant Volkswagen in the wake of the pollution-cheating scam involving its diesel vehicles.

S&P said in a statement it was downgrading VW's long-term debt rating by one notch to A- and could cut it "by up to two more notches" again in future in face of the "wide-ranging negative credit consequences following its admission that it installed software designed to manipulate diesel engine exhaust emissions in 11 million vehicles."

"The downgrade reflects our assessment that VW has demonstrated material deficiencies in its management and governance and general risk management framework," the analysts argued.

"We believe that VW's breach of US environmental law and potential other laws outside the US represents a significant reputational and financial risk to VW over the medium term," the statement continued.

Last month, VW became embroiled in the biggest scandal in its history, when US authorities accused it of fitting diesel cars with devices that can switch on pollution controls when they detect the car is undergoing testing.

They then switch off the controls when the car is on the road, allowing it to spew out harmful levels of emissions.

VW has already said it will set aside 6.5 billion euros ($7.4 billion) in provisions in the third quarter, but its new chief executive has said that sum would only cover the costs of repairs, and that much more was needed to meet potential fines and damages arising from any lawsuits.

"The costs of remediation, compensation, litigation, and potential fines could, however, be substantial and well in excess of this level," S&P said.

The analysts acknowledged that the full facts and consequences of the deception "may not be known for months, even years. We expect VW to experience a negative impact on its sales volumes, prices, and margins." — Agence France-Presse

source: gmanetwork.com