The Strategist

VW Got a Sucker Punch: Domestic Investors Sued the Company


03/15/2016 - 15:00



German investors have decided to abandon patriotism, and have issued a class action lawsuit and submitted claims totaling $ 3.7 billion to Volkswagen. The plaintiffs are dissatisfied with the fact that the automaker is too slow to provide information on the diesel scandal.



pixabay.com
pixabay.com
The suit has been registered in Braunschweig Regional Court on behalf of 278 institutional investors from Germany and other countries. Such large claims on home soil were imposed on the VW for the first time. The company has many problems even without it: numerous proceedings have not yet been completed in the United States, and the potential penalties have already reached $ 20 billion.

Volkswagen admitted the fraudulent installation of equipment in diesel engines 6 months ago. It must be said that German investors have been waiting for a long time before joining the prosecution of the automotive companies.

Law firm Andreas Tilpa, which can also be called a concerned person, represents the prosecution. Mr. Tilp is already trying to recover from the Porsche 2.6 billion euros through the courts. Porsche controls Volkswagen through an effective combination of equity and sibling connections.

In addition to the Germans, the new lawsuit against Volkswagen include companies from Australia, Canada, the Netherlands, France and some other countries. There are Americans, too - the main instigators of the diesel scandal decided to participate in this process. Among those sued is Californian pension fund CalPERS, one of the largest in the United States.

Volkswagen is one of the largest car manufacturers of the world: VW and Toyota are constantly competing for the first place. It is clear that such a company has many investors. Up to the present moment, international investors doubted that VW would be pursueud in Germany. However, it looks like that successful experience in Braunschweig has inspired many. Andreas Tilp said that another 20 companies are considering to join the lawsuit with a total demand to pay more than $ 1 billion. In this case, the total claims in Germany will amount to about $ 5 billion.

Thus, the total loss due to diesel scandal will reach $ 25 billion. It is clear that this is a heavy blow for Volkswagen. Most recently, Michael Horn, CEO of the American VW division, went to an unusual step: announced his resignation and accepted it the same day. Volkswagen is now considering the option of leaving the US mass market: the company can focus on luxury models.

source: bloomberg.com




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