Dozens of Volkswagen’s largest shareholders, along with “thousands” of smaller investors, are planning to sue the automaker, demanding compensation for the losses they’ve experienced as a result of the embattled German automaker’s diesel cheating scandal.
VW is already facing more than 450 lawsuits by owners of its faulty diesel models. Those suits, which have been consolidated by an inter-judicial panel, are expected to heard by a federal district judge in San Francisco. Among other things, those owners claim they have lost trade-in value as a result of the revelations VW rigged its diesel vehicles to improperly pass U.S. emissions tests.
The latest action is being handled by the law firm Nieding + Barth, which intends to bring suit in a German court on behalf of 66 institutional investors in the U.S. and Great Britain.
“On top of that, we collected several thousands of private investors. Therefore we think we are the biggest platform for suits against Volkswagen in Germany,” the firm’s partner, Klaus Nieding, told the Reuters news service.
In September the U.S. the Environmental Protection Agency announced it had discovered a so-called “defeat device” was in use on the maker’s 2.0-liter diesel models. VW subsequently confirmed that surreptitious software was installed on 11 million vehicles sold worldwide, including 482,000 in the U.S. It has since acknowledged cheating on tests involving a more upscale 3.0-liter diesel engine, as well.
Volkswagen has seen its stock drop by nearly a third since then, losing about $24 billion, or 22 billion euros, in total value. The maker has so far set aside more than $7 billion to cover potential costs and damages, but it has also lined up a $20 billion line of credit and reportedly pledged to sell off some of its assets, if necessary, to repay that fund.
(VW CEO insists the maker “didn’t lie.” For more, Click Here.)
The maker faces a lawsuit filed earlier this month by the U.S. Justice Department that could cost it $46 billion, though legal observers believe the final penalty will be significantly smaller if the company makes a good-faith effort to resolve the problem.
VW was planning to begin fixing vehicles sold in overseas market this month, with repairs set to be completed before the end of 2016. But a proposed fix for models sold in the U.S. – which has some of the world’s toughest diesel emissions standards – was rejected last week by both the EPA and the California Air Resources Board.
That was just one of a series of issues facing Matthias Mueller, the executive named VW chief executive in late September, following the ouster of long-time CEO Martin Winterkorn.
Mueller anchored a news conference at the North American International Auto Show in Detroit before heading to Washington to meet with officials from the EPA. But he created a sizable stir by telling an NPR correspondent that the company “did not lie,” but simply misunderstood U.S. diesel emissions rules.
(Click Here for details VW’s Mueller defending VW’s honor.)
That statement was quickly derided by those who noted the maker had designed its defeat device software to specifically detect when a vehicle was undergoing emissions testing. Otherwise, its 2.0-liter diesels were allowed to produce as much as 40 times the U.S. mandate for emissions of smog-causing oxides of nitrogen, or NOx.
Previously, several senior VW executives tried to downplay the scandal by attributing the cheating to just a handful of software engineers. But as of last week, at least 40 VW employees had come forward under an internal amnesty program set up as part of VW’s own investigation into the scandal.
A report in the influential German publication Bild am Sonnstag indicated there is growing concern about CEO Mueller’s leadership. But a separate report by Reuters was more upbeat.
“Everybody can see that Mr Mueller’s U.S. trip was not successful. He made a mistake. But that does not mean that we move away from him,” a source close to the board told the news service. “The Porsche and Piech families stand firmly behind Mr Mueller.”
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The two branches of the family of Volkswagen founder Ferdinand Piech hold a controlling interest in the German maker – and have collectively lost more than any of VW’s other shareholders.