VW suspends sales in S Korea

  • 23/07/2016
epa05386419 An archive picture made available on 23 June 2016 shows dark clouds over a Volkswagen (VW) plant in Wolfsburg, Germany, 23 September 2015. According to reports, Volkswagen on 23 June 2016 agreed to pay more than 10 billion US dollars aimed to settle claims in the US on the diesel emissions cheating scandal.  EPA/JULIAN STRATENSCHULTE

German carmaker Volkswagen will suspend sales of most of its models in South Korea from July 25 as pressure builds on the company over its falsified emissions tests.

South Korea is the latest country forcing Volkswagen to take drastic measures to repair its image since the carmaker admitted to cheating US diesel emissions tests and said that up to 11 million vehicles worldwide could be fitted with illegal software.

"We have decided to suspend sales of the affected models to reduce confusion among dealers and customers," a spokesman for Volkswagen's South Korean business said.

The move comes ahead of an environment ministry review this month or in early August on whether to revoke certification of the 32 vehicle types offered for sale by Volkswagen and its Audi brand, which would lead to a sales ban.

Volkwagen is due to present its case on July 25.

South Korean prosecutors last month issued the first warrant for the arrest of a VW executive in connection with the emissions scandal.

Globally, the company has already set aside about 16.2 billion euros to cover the cost of the scandal and this week said that it had set aside a further 2.2 billion euros.

NordLB analyst Frank Schwope has raised his estimate for the cost of the scandal to between 25 billion euros and 35 billion euros, up from a range of 20 billion euros to 30 billion euros.

Volkswagen has been struggling with a sales slump in South Korea, Asia's second-biggest diesel car market.

Sales of VW-branded cars in South Korea slumped 33 percent to 12,463 vehicles in the first half of this year, industry association data shows.

The group's top-selling vehicles in Korea last year were the Volkswagen Tiguan 2.0 TDI BlueMotion, with 9467 vehicles, and the Audi A6 TDI, with 7049 vehicles, according to the Korea Automobile Importers and Distributors Association.

German car sales in South Korea have soared since a 2011 free-trade deal eliminated duty on vehicles imported from Europe.

Reuters