The Ministry of Environment (MOE) has decided to suspend the sale and revoke the certification of 83,000 vehicles of 80 models in 32 variants sold by Audi Volkswagen Korea as of August 2.
It also separately slapped a fine of 17.8 billion won (US$16.07 million) on Audi Volkswagen Korea for 57,000 vehicles of 47 models in 24 variants that fabricated documents for emission tests, except for noise level tests. Previously, the ministry was expected to fine the company 68 billion won (US$61.4 million) but it applied the former regulation on fines, which limits them to 1 billion won (US$902,935) per vehicle type as well as 3 percent of their sales. Audi Volkswagen Korea decided to voluntarily halt the sales of its vehicles from July 25, three days before the amendment to the Clean Air Conservation Act went into effect on July 28 in a bid to lower its fines.
However, Audi Volkswagen Korea is still taking a strong against the ministry’s decision for the ban on its sale and the revocation of its certification. The company has never admitted its forgery in documents on emissions and noise-level tests that Volkswagen had used to win government certifications.
Rather, Audi Volkswagen Korea said in its press release immediately following the ministry’s announcement, “We regret that the MOE has imposed the strictest sanction in revoking the certifications of our 12 vehicle models.’’ The company also said that it will come up with countermeasures after closely looking into the government’s sanctions.
An official from Audi Volkswagen Korea said on August 2, “The company is considering countermeasures, including filing for injunction on the administrative action. It also plans to reapply for certifications after selecting vehicles which can obtain certifications.” Although Audi Volkswagen Korea will have difficulties in conducting normal business activities in the future, the company showed its will not to give up the Korean market.
It can submit new certification applications to the MOE for the models whose certifications have revoked from the 3rd. However, an official from the ministry said, “We have a backlog of certification applications for other brands’ vehicles and we need more time to certify vehicles of Audi Volkswagen which has a record of document forgery. It can take more than several months for certification procedures.”
Some say that Audi Volkswagen Korea is unlikely to file an administrative litigation. This is because the MOE imposed the minimum amount of the fine and the company will be forced to pay 10 billion won (US$9.03 million) per vehicle type in fines when the company loses in an administrative litigation. Ha Jong-sun, a lawyer of local law firm Barum, said, “As prosecutors made a thorough investigation into manipulating documents, including criminal falsification, the company has a bare chance to overturn the government’s decision through an administrative litigation.”
With the latest government’s decision to revoke certifications and stop sales, Audi Volkswagen Korea is expected to see a rapid fall in sales. The company is making an every effort to maintain its customers and dealers but it will struggle to do so until its models receive certifications again.
Audi and Volkswagen ranked third and fourth in the Korean imported car market in the first half of this year, following Mercedes-Benz and BMW. Due to a huge sales gap with Ford, which came in fifth, the rankings are unlikely to change in the second half. However, there is an overriding prediction that sales of Audi Volkswagen Korea will rapidly drop by more than 50 percent.