VW’s diesel woes deepen with ban in South Korea
August 02 2016 08:37 PM
Emblems of VW Golf VII car are seen in a production line in Wolfsburg. South Korea said yesterday it would block sales of 80 VW models and fine the company 17.8bn won ($16mn) because the carmaker fabricated documents related to emissions and noise-level tests.


Volkswagen faced two new fronts in the diesel crisis after South Korea all but banned sales of the automaker’s models and the state of Bavaria threatened to sue over the cheating scandal.
South Korea said yesterday it would block sales of 80 VW models and fine the company 17.8bn won ($16mn) because the carmaker fabricated documents related to emissions and noise-level tests. The German state of Bavaria, where VW’s Audi brand is based, a few hours later announced plans to sue for as much as €700,000 ($783,000) over losses at a state pension fund that owns the automaker’s stock.
The announcements come just a week after VW appeared to be getting its hands around the crisis, reaching a settlement with US federal and state authorities to pay $15.3bn to cover the cost of getting 482,000 rigged vehicles off the country’s roads. Approval of the agreement advanced Volkswagen’s push to resolve more than 1,000 US lawsuits springing from the diesel-cheating scandal.
“The lion’s share of legal woes for Volkswagen, as well as fines, have been dealt with in the settlement in the US,” said Frank Biller, a Stuttgart, Germany-based analyst with LBBW. “But there’s still the potential for further headwinds, as the latest news shows.”
Volkswagen fell as much as 3.6% and was trading down 3.4% at €120.95 as of 2:02 pm in Frankfurt. The stock has plunged 23% since the cheating came to light.
The potential lawsuit in Bavaria stems from VW’s disclosure obligations, which the state believes the automaker did not meet when providing information on the scandal, Tina Dangl, a Bavarian Finance Ministry spokeswoman, said by phone. As a result, the pension fund lost money on its VW holdings, she said. The state plans to file the suit next month. VW declined to comment because the company has not yet received any filing.
In South Korea, the new restrictions affect 83,000 vehicles, the Environment Ministry said in a statement. The 32 certification types for 80 VW, Audi and Bentley models sold in the country have had their approvals withdrawn, it said.
The actions in South Korea are among the most drastic against VW since the revelation by US regulators in September that the carmaker had rigged its diesel models to cheat on emissions tests. The company has set aside about €18bn to cover worldwide costs related to the scandal. While regaining certification in South Korea typically takes three months, the ministry said it may take longer to carry out thorough inspections and visit Volkswagen’s headquarters in Wolfsburg, Germany, if necessary.
The Audi Volkswagen Korea division is working with South Korean authorities on a quick resolution and a full accounting of any irregularities, said Leslie Bothge, a spokeswoman at the German carmaker. All vehicles that have already been registered can continue to be used without restriction, while the goal of the talks will be to resume offering a complete model lineup to customers as soon as possible, she said. The automaker is also still facing a number of other challenges. In the US, VW said yesterday that it’s seeking dismissal of a federal lawsuit by some shareholders. In the European Union, officials want the 8.5mn owners of VW diesels to get similar compensation pledged to American customers.

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