Audi has been fined €800 million ($925 million) as part of a settlement with German prosecutors investigating emissions norms breaches by the extensive Volkswagen Group. The company will not appeal against the fine.
The Munich II public prosecutor claims that certain versions of Audi’s V6 and V8 diesel engines breached regulations pertaining to “emissions service” and “power engine approval”. Prosecutors also said that the Ingolstadt-based carmaker “failed to discover” that its vehicles sold within VAG’s EA288 and EA189 diesel engines featured an impermissible software function that masked the engine’s true emissions during testing which was uncovered in the Dieselgate scandal.
In a statement regarding the allegations, Audi said that it “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 is made up of two breaches of regulations: A maximum €5 million ($5.78 million) penalty for ‘negligent regulatory offences’, and €795 million ($919 million) for ‘disgorgement of economic benefits’.
In a regulatory statement released detailing the prosecution and its effects on the firm, the company said, “Considering these special items, the Audi Group will significantly undercut major financial key performance indicators forecasted for the fiscal year 2018.” Parent group Volkswagen also projected a dent in its earnings for the same time period. The settlement ends the probe against Audi in its entirety, cases against several VAG executives are still open, along with a number of lawsuits filed by car buyers from different countries the company operates in.
Analyst firm Evercore ISI said it viewed the fine as “manageable”. The firm looks at the settlement as a “positive” for removing another uncertainty in the Group following the massive diesel scandal. However, it projects that a shareholder case VW is facing for $9.5 billion could run for “years”. Researching into Audi’s decision to settle up the fines and accept the norms breach, Evercore believes markets will “look through the fine and view the resolution at Audi positively.”