Audi offices, plants in Germany raided by prosecutors amid VW diesel scandal
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| Audi likely cheated too |
German prosecutors searched Audi's two biggest plants and other sites on Wednesday in connection with the emissions scandal still rocking parent Volkswagen Group, adding to pressure on the luxury division and its CEO Rupert Stadler.
Volkswagen admitted in September 2015 that up to 11 million of its vehicles worldwide had software installed that cheats emissions tests, unleashing its biggest ever crisis.
The raids, the first at Audi since VW's diesel scandal broke 18 months ago, centered on who was involved in the use of any illicit software used in 80,000 VW, Audi and Porsche cars with bigger 3.0-liter engines that were found to exceed U.S. emissions limits.
Volkswagen has already agreed to pay more than $1 billion to fix or buy back the 80,000 cars as part of an overall U.S. settlement expected to cost the group as much as $17.5 billion.
"With these search orders we aim to clarify in particular who was involved in deploying the technology concerned and in the provision of false information to third parties," the Munich prosecutor's office said in a statement on Wednesday, without naming any suspects.
It said the raids involved prosecutors from several jurisdictions and state police from Bavaria, Baden-Wuerttemberg and Lower Saxony.
The police swoop coincided with a major annual press conference at which Stadler was presenting Audi's 2016 earnings — compounding the group's embarrassment.
"I have all along supported efforts to clear up the diesel issue at Audi," he told reporters, while conceding that efforts to recover from the scandal were "far from over."
A statement from the prosecutor on Wednesday's raids cited suspicion that the cars, sold in the United States between 2009 and 2015, were also fitted with devices to cheat tests.
VW's Wolfsburg headquarters were searched, along with Audi's Ingolstadt and Neckarsulm factories and six other unspecified sites, the group said. The two Audi plants employ a combined 60,000 workers.
Some 70 law enforcement officials also searched offices and private apartments as part of the Ingolstadt operation, a person familiar with the matter told Reuters, adding that Stadler's home was not among those raided.
Stadler, who has run Audi since 2007, has been criticized for his handling of the emissions scandal but said on Wednesday he continues to command the VW board's full support, reiterated publicly last month.
Ingolstadt-based Audi said it had every interest in getting to the bottom of the emissions-cheating scandal and was fully cooperating with the searches.
"We will keep at it until this work is done," Stadler said.
Cars sold in European markets are outside the scope of the investigation, the Munich prosecutor said.
Audi last month said it had fired four engineers from its diesel division for "gross breach of duty." Audi created so-called defeat devices which cut emissions in 1999, years before VW Group used them to cheat diesel emissions tests, German newspaper Handelsblatt reported last year.
The searches began shortly before the beginning of the Audi's annual earning press conference. Prosecutors only learned of the conference when it was too late to change the timing of the search, the Sueddeutsche Zeitung said.
Not at home
Stadler said his private home was not searched in the raid.
"I have all along supported efforts to clear up the diesel issue at Audi," Stadler told journalists.
Stadler declined comment on the possibility that ongoing investigations could bring about further personnel changes and referred to moves announced previously.
Peter Mertens, senior vice president for r&d at Volvo Car Corp., will take up his position as head of technical development at Audi on May 1, the CEO said, replacing former r&d boss Stefan Knirsch, who left the manufacturer in connection with the emissions scandal.
Separately, sales chief Dietmar Voggenreiter played down a 24-percent plunge in two-month Chinese deliveries as temporary, reflecting uncertainty among dealers about the implications of a new joint venture agreement.
Also, finance chief Axel Strotbek said he currently did not expect the need to further increase provisions for the scandal beyond the 1.63 billion euros ($1.73 billion) Audi has set aside so far.
Profit blow
Audi's 2016 results showed a 37 percent plunge in operating profit to 3.1 billion euros, causing the return on sales to fall to 5.1 percent from 8.3 percent in 2015, below a target range of 8 percent to 10 percent.
The raids mark a fresh blow to VW Group's efforts to overcome the diesel-engine manipulation scandal that erupted in September 2015. Protecting profit at Audi, its biggest earnings contributor, is key for VW Group as it spends money on fixing as many as 11 million rigged diesel cars while maintaining financial firepower to develop electric models and new digital services.
The prosecutors' probe also adds to Audi's woes as it has been losing ground to Daimler's Mercedes-Benz, which replaced BMW's namesake brand 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.
Bloomberg and Automotive News Europe contributed to this report.