By on January 10, 2017

VW logo

Volkswagen has negotiated a conclusive plan with the U.S. Department of Justice for a criminal and civil settlement worth $4.3 billion. While the company has confirmed the status of the settlement, it also stated that the full impact of the deal on its annual finances could not yet be established.

Germany’s largest carmaker said Tuesday that it anticipates a guilty plea in response to the criminal charges against it. It also expects to pay the full settlement over accusations that it intentionally modified over half of a million diesel vehicles with software designed to cheat U.S. emissions standards.

Reuters reports that VW’s supervisory board will meet on Wednesday for final approval on the matter. However, they are likely eager to move past the company’s emissions-cheating scandal as quickly as possible — or at least before the January 20th inauguration of President-elect Donald Trump.

“There is apprehension in the market that Trump may become an unpredictable president and turn against non-U.S. companies,” announced Bankhaus Metzler analyst, Juergen Pieper. “The deal is not cheap but it gives clarity to investors and relief to VW.”

As part of a settlement, Volkswagen is required to comply with significant reforms and face monitoring from an independent overseer.

However, it is not apparent if the settlement will have any impact on the criminal investigations into individual managers and executives. Two VW employees have already been charged by U.S. prosecutors with conspiracy to defraud the United States over the emissions cheating scandal. Prosecutors in Germany have continued to investigate whether former VW CEO Martin Winterkorn intentionally deceived investors by withholding information about the magnitude of its problem with U.S. regulators.

Also under close scrutiny are Volkswagen brand chief Herbert Diess and chairman Hans Dieter Pötsch. VW has maintained that no board members were involved in the planning or concealment of the scandal, explaining that it did not release information on the diesel crisis sooner because it expected to reach a negotiated settlement with U.S. regulators.

The automaker recently agreed to separate civil settlements totaling roughly $17 billion — compensating U.S. consumers and dealers who owned diesel vehicles affected by the scandal while also offering buybacks and software fixes.

Earlier today. Volkswagen announced it enjoyed record group sales in 2016, for a combined sum of 10.3 million vehicles. That number should place VW as the world’s largest car producer by volume for 2016 and is an increase of 3.8 percent on last year’s figure.

Get the latest TTAC e-Newsletter!

17 Comments on “Volkswagen Expected to Plead Guilty, Reach $4.3 Billion Criminal Settlement...”

  • avatar

    I can’t quite wrap my head around how they pulled it off. You have to meet with the developers to get them to write the cheat code, then you need testing scenarios and a testing team and bug tracking and trouble tickets. It’s a 600k person company.

    How do you even send out the meeting invites and schedule the conference rooms in Outlook – do you have a code name for the cheating project?

  • avatar

    “Trump may become an unpredictable president and turn against non-U.S. companies,”

    That explains his Twitter tirade against Ford.

    The “unpredictable” part I whole heartedly agree with, but I don’t think it only applies to non-U.S. companies.

  • avatar
    SCE to AUX

    “That number should place VW as the world’s largest car producer by volume for 2016 and is an increase of 3.8 percent on last year’s figure.”

    Well, they lost 10% of their slice in the US between 2015 and 2016 (1.8% vs 2.0%). Not that VW actually cares.

    If VW Group sold 10.3 million cars worldwide last year, then the US is only 5.7% of their business. A little dip here won’t hurt them one bit, despite what I thought earlier.

    They’d like to simply write the check for the fines and settlements, and ‘move on’, after having a few perps go away for awhile to satisfy the Feds.

  • avatar

    VW is smart to quickly settle under a weak President rather than face unknown actions from a strong no non-sense smart leader in President Trump. VW shareholders should breath a sigh of relief.

  • avatar
    Master Baiter

    This is a ridiculous amount of money to fine a company, considering the actual damages from the incremental emissions probably amounts to about 48 cents.

    • 0 avatar

      The incremental emissions were mostly oxides of nitrogen. One cheaty diesel car was emitting as much NOx as up to 50 compliant cars, and some math that was done back when the scandal first broke suggested that diesel VWs alone might be responsible for as much as 10% of the total automotive NOx emissions in places like LA with high concentrations. The scientific picture is not totally clear about the public health effects of higher NOx, but it strongly suggests an association with higher rates of cancer, increased complications from asthma, and reduced oxygen absorption capacity. Since you are so confident that the effects of these emissions were negligible, I suggest the next study involve exposing you to higher NOx concentrations to see what happens.

      • 0 avatar

        Excellent reply “dal20402”.

      • 0 avatar

        No one cheaty diesel car was not emitting as much NOx as up to 50 compliant cars, those headlines and stories were pure click bait sensationalism. What was found out that in certain situations the car emitted 47 times the limit when measured instantaneously. There is no instantaneous limit at all. The regulations are on a grams per mile basis. Actual testing is done by collecting all of the emissions, analyzing it and then calculating the average grams per mile. So the peak numbers are irrelevant as far as the regulations are concerned. So you could emit 50x the regulation for half the time the vehicle was running as long as you emitted 1/50th the limit the rest of the time the vehicle was running. Of course they probably never had instantaneous readings less than the standards and certainly not enough to offset the times they were emitting way more than the standards. My guess is that on average they pollute maybe 10x the standard but of course that doesn’t make for good click bait.

        • 0 avatar

          50x the limit for half the time still averages out to 25x the limit even if the other half of the time emissions are zero.

          • 0 avatar

            Correct it was late and I made a mistake. However the fact still remains that they never found that they put out 50x the emissions overall just that when measured instantaneously there were times that the emitted 47x the limit on an instantaneous basis and I can bet that those conditions would be unregulated, ie outside of the scope of the test that never calls for extended high speed full throttle application.

        • 0 avatar
          Jack Denver

          Oh, so they were only emitting 10x as much as legally permitted – I feel much better now.

      • 0 avatar

        I realize many factors can cause cancer and other ailments, but I’d like to see some data on cancer rates and NOx amounts in European cities which have a higher diesel population.

  • avatar

    That’s what – $7,500 per cheating car?

    Why can’t private citizens pay the government $7,500 and drive / import a non-compliant car? Breaking the law is okay when you have attorneys?

Read all comments

Recent Comments

  • Kruser: We had a Colt wagon it was… meh. But, perhaps it didn’t have a chance in comparison to the other...
  • Bike: You throw a lot of “facts” around old mate.
  • Bike: You throw a lot of “facts” around old mate.
  • dal20402: “Wages for most white collar jobs have been the same” This is emphatically not true in either...
  • slavuta: I feel he will not get to enjoy his new $$

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber