Audi raided by German prosecutors in diesel scandal fallout

Volkswagen AG’s Audi brand was raided by German prosecutors as investigations into the manipulation of diesel engines continue to weigh on the automaker more than a year after revelations of emissions cheating.

More than 100 police took part in searches yesterday at the company’s main sites in Ingolstadt and Neckarsulm as well as seven other locations across Germany. The probe is focused on potential consumer fraud related to Audi’s role in developing tainted 3-liter diesel engines in the U.S., with officials seeking information on individuals involved, the Munich prosecutors office said in a statement. The company said it was cooperating fully with authorities.

The raids, which started at 7 a.m. local time, came the same day that Audi was holding its annual press conference and mark a fresh blow to Volkswagen’s efforts to overcome the cheating crisis that erupted in September 2015. Rather than grappling with renewed allegations, Audi had planned to shift attention to its recovery strategy after its role in manipulating about 80,000 diesel cars led to a 1.63 billion-euro (USD1.73 billion) charge last year from a settlement with U.S. authorities.

“I myself have greatest interest in the clarification of the matter,” Audi chief Rupert Stadler said yesterday at the brand’s headquarters in Bavarian town of Ingolstadt, declining to comment on the reason and timing of the raids. “The diesel crisis has been the worst disruption in our history,” said the executive, who has weathered pressure even after the brand initially denied cheating before backing down.

Volkswagen yesterday had sought to draw a line under the crisis, with CEO Matthias Mueller saying
the company is
“back on track” and in a position to push ahead with tackling an “epochal shift” in the auto industry. Still, he acknowledged that legal disputes will continue to preoccupy the company for many years.

Audi, Volkswagen’s biggest profit maker, is critical for Volkswagen, as the auto giant seeks to absorb 22.6 billion euros in scandal damages. That burden comes on top of more than 10 billion euros in investment needed to shift strategy toward self-driving, electric vehicles. For its part, Audi set up a new subsidiary, dubbed Autonomous Intelligent Driving GmbH, to develop robot cars and plans three battery-powered cars by 2020.

The prosecutors’ probe adds to Audi’s woes as it has been losing ground to Daimler AG’s Mercedes-Benz, which overtook BMW as the world’s bestselling premium-car maker last year. Audi’s global sales declined 1.1 percent in February to 125,100 cars as a dispute with dealers in its largest market China escalated. Audi’s deliveries in China fell 5.8 percent to 32,155 cars last month. Christoph Rauwald, Bloomberg