Seoul, South Korea - South Korea has suspended sales of most Volkswagen models in a fresh blow to the carmaker as it struggles to overcome the global repercussions of its emissions-test cheating scandal and rebuild its tattered image.
The government revoked certification for 80 Volkswagen, Audi and Bentley derivatives, and fined Volkswagen 17.8 billion won (R224 million) for allegedly forging documents on emissions or noise-level tests.
The move could slam the brakes on Volkswagen sales in the Asian market, where its local unit has more than tripled revenue to 2.82 trillion won (R35.5 billion) over the past five years before becoming mired in the emissions scandal.
Volkswagen described the ruling as “most severe” and said it would consider a legal challenge.
The environment ministry said 209 000 Volkswagen AG vehicles - 68 percent of group sales since 2007 - had been de-certified in South Korea since November 2015, mainly over emissions-related problems.
While South Korea is a relatively small market for Volkswagen, it is a major market for its luxury marques Audi and Bentley and one of the fastest-growing markets for all brands.
Officials said it could take more than three months for the affected brands to be back on showroom floors.
Environment ministry director Hong Dong-gon told reporters: “It usually takes three months for vehicle certification, but this may take longer for Volkswagen, as we will take thorough steps.”
Any delay in recalls previously ordered over emissions test manipulation could be met with an order for Volkswagen to exchange those vehicles for other models, Hong added.
Legal action
In a letter to customers posted on its South Korean homepage, Volkswagen said it would consider requesting an “injunction of execution”.
It also could take legal action against the government's decision “if this will help recover our company's business reputation and benefit our consumers, dealers and other partners,” it added.
Volkswagen voluntarily halted sales of most of its models in South Korea from 25 July, ahead of the government's decision.
The company reported a 12 percent drop in quarterly profit at its main passenger car division last week, showing the challenges it still faces since admitting in September to using software to falsify pollution tests on some diesel cars.
In addition to billions of dollars in costs related to the scandal, it is also tangled in legal action in the United States, Germany, South Korea and elsewhere.
South Korea has taken a particularly tough line, with prosecutors raiding Volkswagen's Seoul offices and arresting an executive in June.
Reuters