VW to visit US over scandal
Frankfurt - Volkswagen’s top executives will visit the US in coming days as tensions rise with the US government, which is seeking penalties as high as $80 billion amid a lack of progress on fixing vehicles rigged to cheat emissions tests.
The visits by CEO Matthias Mueller and Herbert Diess, chief of the VW brand, are the first since the scandal broke in September. Diess will speak at the Consumer Electronics Show in Las Vegas this week and appear at the North American International Auto Show in Detroit starting Sunday. Mueller is set to meet politicians and possibly other officials next week, though his schedule hasn’t been published.
"The US is playing a key role as VW faces the biggest financial threat there, and the risks elsewhere declined substantially," said Juergen Pieper, a Frankfurt-based analyst for Bankhaus Metzler. "It’s important that VW hit the right tone."
The visits come after the US Justice Department sued Volkswagen Monday for installing illegal devices meant to defeat emissions tests. The claims could push penalties in theory as high as $80 billion, based on four violations of the Clean Air Act for each of the approximately 580 000 cars affected. The Environmental Protection Agency said talks on how to deal with vehicles sold with defeat devices haven’t produced an acceptable path forward.
The shares fell 4.3 percent to 120.95 euros at 11:09 a.m. in Frankfurt. Volkswagen has lost more than 10 billion euros ($10.8 billion) in market value since September 18, when the EPA first said the company admitted to cheating.
The US situation contrasts with the progress Volkswagen has made in Europe in addressing the scandal. The company won German regulators’ approval last month for low-cost fixes for 8.5 million engines equipped with emissions-manipulating software, the majority of the 11 million sold worldwide. Repairs are due to start this month.
Still, the most important question for the company is how soon it can announce a solution in the US, Arndt Ellinghorst, a London-based analyst for Evercore ISI, wrote in a note. Ellinghorst, who has a “buy” recommendation on the stock, argued that Volkswagen should mollify both dealers and customers by buying back the affected vehicles.
“The more VW spends on fixing its US problems, the lower its legal charges will be at the end,” the analyst wrote.
-With assistance from Alan Katz and Margaret Cronin Fisk.