Auto Shares Rally as Volkswagen Prepares $10 Billion Diesel Settlement

Investors cheered by news that Volkswagen hopes to finalise compensation offered to US car owners and authorities

Karen Kwok 21 June, 2016 | 11:23AM

Shares in Volkswagen (VOW3) posted sharp gains on Monday, rising by 5.5%, after the beleaguered car manufacturer was reported to be making progress on a $10 billion settlement in the US, after it admitted cheating on diesel emission tests last year.

This settlement – expected by the end of this month - could see it fix half a million emission-cheating cars, or get them off US roads, even though the regulators have yet to approve the proposed ‘fixes’.

Citing unnamed sources, Bloomberg said it has learned that Volkswagen, Europe’s largest automotive manufacturer, plans to set aside $6.5 billion to cover compensation for car owners and $3.5 billion for the US government and California regulators. Part of the deal also includes an option for car owners to request their vehicles be repaired, however that would not guarantee an approved fix, according to same sources.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Bayerische Motoren Werke AG73.04 EUR-0.07
Daimler AG56.45 EUR-0.25
Ford Motor Co9.09 USD0.00
Peugeot SA19.77 EUR-1.13
Renault SA33.36 EUR-2.23
Valeo SA32.52 EUR-2.98
Volkswagen AG141.34 EUR-3.14

About Author

Karen Kwok

Karen Kwok  is a Reporter for Morningstar.co.uk

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