Volkswagen AG confirmed on Tuesday it has negotiated a $4.3 billion draft settlement with U.S. regulators to resolve its diesel emissions troubles and plans to plead guilty to criminal misconduct.
The guilty plea is part of the civil and criminal deal as the automaker looks to restore its tarnished global brand. Volkswagen said with the addition of the fine, its diesel costs will exceed the nearly 18.2 billion euros ($19.2 billion) it has set aside to handle the problem. VW also said it will face oversight by an independent monitor over the next three years.
Reuters reported earlier the company’s supervisory board is set to meet on Wednesday to approve a civil and criminal settlement with the U.S. Justice Department over the automaker’s diesel emissions. VW said the supervisory board and the management board would meet Tuesday or possibly Wednesday to approve the deal.
VW is expected to plead guilty as part of the settlement as early as Wednesday, a source familiar with matter said. The plea deal will need the approval of a U.S. judge.
Evercore ISI said in a research note it believes the “settlement is intended to draw a line under all remaining U.S. related legal risk. This is good news.”
VW had raced to get a deal done before President Barack Obama leaves office on Jan. 20. A change in administration could have delayed a final settlement for months if not longer.
Stocks climbed Wednesday as Wall Street posted a second straight day of gains in the new year and the Dow once again approached the 20,000 milestone.
The Dow Jones industrial average ended up 60 points, or 0.3%, to 19,942.16. The blue-chip index rose has come close to topping 20,000 several times in recent weeks but each time it gets near has pulled back. The Standard & Poor’s 500 index rose 0.6% and the Nasdaq composite index gained 0.9%. Both the S&P 500 and Nasdaq are near their record closing highs.
Stocks maintained their gains following the release of the minutes from the latest Federal Reserve meeting that provided clues to why policymakers raised interest rates in December for only the second time since 2006 and forecast three rate hikes in 2017 instead of the two moves previously anticipated.
Fed officials said they might have to raise interest rates faster than anticipated to prevent rapidly falling unemployment and President-elect Donald Trump’s proposed fiscal stimulus from fueling excessive inflation, according to minutes of the Fed’s December 13-14 meeting.
Benchmark U.S. crude was up 1.8% to $53.24 a barrel in New York. It lost $1.39 on Tuesday.
China will soon slap a penalty on an un-named U.S. automaker for monopolistic behaviour, the official China Daily newspaper reported on Wednesday, quoting a senior state planning official.
Investigators found the U.S. company had instructed distributors to fix prices starting in 2014, Zhang Handong, director of the National Development and Reform Commission’s price supervision bureau, was quoted as saying.
News of the penalty comes at a sensitive time for China-U.S. relations after U.S. president-elect Donald Trump called into question a long-standing U.S. policy of acknowledging that Taiwan is part of “one China”.
Beijing maintains that self-ruled Taiwan is a wayward province of China and has never renounced the use of force to take it back.
Zhang was quoted in an exclusive interview with the newspaper as saying that no one should “read anything improper” into the timing or target of the penalty.
Leading car manufacturer Toyota has moved the National Green Tribunal arguing that the idea to ban diesel vehicles across the country was like a “corporate death penalty” as it impacts the existence of the company.
In its plea, the automobile company said ban on the registration of diesel vehicles manufactured by the applicant company is “unfair and unjust” as it was complying with all the laws and any restriction would severely impact its sales and the livelihood of thousands of people engaged in the automobile sector.
“The applicant company is being penalised for no fault or violation on its part thereby making the order banning registration of diesel cars as unjust and unfair on the company.
“The imposition of ban on registration of diesel vehicles is in the nature of a corporate death penalty as it impacts the very existence of the company. A ban order is an extremely harsh/excessive punishment and ought to be imposed in circumstances where a party commits a serious violation and not when there is no violation,” Toyota said.
Rolls-Royce has unveiled its first ever driverless car, with a “vision vehicle” it hopes will cast a glimpse into the future of luxury transport.
With no steering wheel, a door on only one side and a virtual assistant that can book hotels or advise on your wardrobe selection, the car promises to be like no other made by the super-luxury marque
Several automakers have revealed plans for self-driving models.
But Rolls-Royce said its customers, who currently pay up to £1m for a bespoke, hand-built model, will still demand a luxurious riding experience in an era where everyone will be chauffeured by robots.
“In 25 years from now, when you see commoditised bubbles as cars, there will be our customers who are used to sitting in something that is luxury,” said Torsten Muller-Otvos, chief executive of Rolls-Royce Motor Cars.
The design, over a year in the making, is a rejection of “utilitarian and bland future modes of mobility”, he added.
The worst fear of car makers is coming true, as a drive against diesel vehicles spreading outside the national capital region (NCR).
The National Green Tribunal (NGT) on Monday ordered the Kerala government to stop registering diesel vehicles with engine capacity of 2,000cc and above, except public transport and local authority vehicles. The first such ban was imposed in NCR by the Supreme Court in December last year, severely impacting companies such as Toyota and Mercedes Benz.
“The state of Kerala shall not register any diesel vehicle with the capacity of 2,000cc and above, except public transport and local authority vehicle,” the NGT order said.
Executives of Toyota, Mahindra & Mahindra and Mercedes did not comment on the development. An official of industry body the Society of Indian Automobile Manufacturers (Siam) also declined to comment.
Toyota and Mercedes have seen their sales in NCR go down after the ban. Mahindra had introduced a 1,990cc diesel engine for its popular models to bypass the ban.
Speaking on the condition of anonymity, an industry executive said the order was “shocking” and expressed apprehension that the Kerala ban could be a precedent for more states. Public interest litigations against diesel vehicles have already been filed in Gujarat and Maharashtra, among others.
Germany issued a recall for 630,000 cars across Europe after finding emissions irregularities on cars made by Mercedes, General Motors’ Opel unit and Volkswagen Group.
Transport Minister Alexander Dobrindt released the findings of a comprehensive investigation of diesel engines’ emissions, which he established last year after VW admitted to installing “defeat devices” in 11m cars worldwide
Fifty-three car models were tested. Only VW cars – including its Porsche, Audi, and namesake car unit – were found to have software that recognised when the car was being tested and then cheated to understate emissions.
However, others used technology, called “Thermofenster” in German, that switches off emissions treatment systems at certain temperatures. The technology is supposed to be used to protect the engine from over-heating, but Mr Dobrindt said investigators had doubts that it was being used solely for this purpose.
The carmakers have agreed to carry out a voluntary recall to service the cars with a software tweak. The KBA, a German authority responsible for traffic regulation, will then test the cars to make sure they are in compliance.
A spokesperson from Daimler, the owner of Mercedes-Benz, said 247,000 cars will be recalled. He added, “all of our vehicles have been certified and licensed in accordance with the applicable legal requirements.”
The Central excise department has accused three Volkswagen firms of evading duty of over Rs 323 crore by undervaluing cars that were sold in India between January 2010 and December 2014, according to an adjudication order passed by principal commissioner of central excise in Pune on February 29.
The 190-page order, reviewed by The Indian Express, has also upheld the penalty of an equal amount of Rs 323 crore imposed by the excise department — taking the firm’s total liability to over Rs 646 crore. The three firms are Volkswagen India, Skoda Auto, Aurangabad and Volkswagen Group Sales India. When contacted, Volkswagen India’s official spokesperson said: “(We have) received the said order. However, we are still evaluating the details. Volkswagen has been doing all its transactions at an arm’s length and as per the well-accepted industry practices. We will appeal against the order.”
According to the Directorate General of Central Excise Intelligence (DGCEI), the three firms paid duty on the value of the car at the factory gate. This, officials said, allegedly violates norms as the three firms are “related parties” and should pay duty on the value at which a car is sold to the customer by the sales office of Volkswagen in India.
“It is not an arm’s length transaction. There is mutuality of interest in financial transactions of the three companies. Therefore, as per the rule the value of the end seller in this case Volkswagen Group Sales is the value at which duty is to be detected,” an official told The Indian Express. “We have evidence to prove that the price at which their sales centre is selling to the customer is actually the price on which they should pay duty to government,” the person added. According to the excise department data, Volkswagen has sold 2.63 lakh cars between 2010 and 2014.
Don’t look now, but Renault may be pulling a Volkswagen.
The French company’s shares fell by as much as 23% on Thursday after an apparent raid on what a union official described as “sites that have to do with standards testing and engine certification.”
Earlier, AFP reported that the agents from the fraud office of France’s Economy Ministry visited the sites last week seizing computers as part of an apparent probe into emissions testing.
As Bloomberg notes, “French authorities started a probe in September into whether VW deceived customers about the emissions levels of its diesel cars and promised to expand the probe to cover all carmakers, including Renault and PSA Peugeot Citroen.”
Peurgeot shares fell nearly 10% in sympathy. In October, the automaker said it never used software to cheat emissions tests.