VW faces billions in fines as U.S. sues for environmental violations
By Julia Edwards and Georgina Prodhan
WASHINGTON/FRANKFURT (Reuters) - The U.S. Justice Department has sued Volkswagen for up to $48 billion for allegedly violating environmental laws - a reminder of the carmaker's problems nearly four months after its emissions scandal broke.
Although such U.S. lawsuits are typically settled at a fraction of the theoretical maximum penalty, analysts said the size of the claim meant Volkswagen (VW) could face a larger bill than previously anticipated.
"The announcement serves as a reminder/reality check of VW's still unresolved emissions issues," Goldman Sachs analysts wrote in a note, maintaining their "sell" recommendation on the stock.
VW (VOWG_p.DE: Quote) shares fell as much as 6 percent to a six-week low on Tuesday, the biggest drop on Germany's blue-chip DAX index.
The civil lawsuit, announced on Monday, reflects the growing number of allegations against VW since the German company admitted in September to installing devices to cheat emissions tests in several 2.0 liter diesel vehicle models.
According to a Reuters review of the U.S. complaint, VW could in theory face fines of as much as $37,500 per vehicle for each of two violations of the law; up to $3,750 per "defeat device"; and another $37,500 for each day of violation.
The complaint says illegal devices to impair emission control systems were installed in nearly 600,000 vehicles in the United States. (here)
In September, U.S. regulators initially said Europe's biggest carmaker could face fines in excess of $18 billion. Continued...