Audi Agrees to EUR800 Million German Fine Over Diesel Emissions -- Update

(Updates with background, analysts' comments)

 
   By Max Bernhard 
 

Audi AG (NSU.XE) has agreed to pay an 800 million-euro ($925.8 million) fine handed down by German prosecutors, concluding another important probe into parent company Volkswagen AG's (VOW.XE) emissions scandal.

By accepting the fine Volkswagen said it is clearing another hurdle in its path to drawing a line under the three-year-old scandal that has cost it billions of dollars. The German car maker admitted in 2015 to having rigged about 11 million of its diesel vehicles worldwide--including models of its Audi brand--with software to dodge emissions testing rules. German authorities fined the group EUR1 billion earlier this year.

Volkswagen said the Audi fine won't alter the group's 2018 earnings guidance, despite hitting earnings.

Shares in both Volkswagen and Audi traded higher after the announcement, with Philippe Houchois at Jefferies noting that although the penalty is hefty, investors are relieved to finally see a concrete figure after having anticipated a fine for some time.

Arndt Ellinghorst at London-based brokerage Evercore ISI said the fine is "manageable and incrementally positive as it removes another leg of legacy uncertainty."

However, the news led Volkswagen's major shareholder Porsche Automobil Holding SE (PAH3.XE) to issue a profit warning.

Audi has been inextricably involved to Volkswagen's emissions scandal since it erupted. In June, former Audi CEO Rupert Stadler was arrested in connection to the probe and has since remained in pretrial detention. VW removed him from his post about two weeks ago.

Volkswagen is still facing a lawsuit from German shareholders who suffered losses when share prices dropped after the scandal became public. The shareholders allege that the company didn't notify them early enough, and launched a lawsuit against VW in September. If a judge sides with investors, VW could face up to EUR9.2 billion in damages.

The company is facing another class-action style lawsuit from a German consumer group, which plans to go to court in November when such proceedings become possible in Germany due to new legislation.

Write to Max Bernhard at [e-mail]; @mxbernhard

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(END) Dow Jones Newswires

October 16, 2018 06:54 ET (10:54 GMT)

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