Audi Takes A Billion-Dollar Hit In Dieselgate Penalty

That's about a fifth of its profits from last year.

Think Audis have big price tags? Well they do: even a base A3 will cost you upwards of $30k, and the latest limited-edition R8 with the Competition package will set you back a good $240k. But those purchase prices are nothing compared to what their manufacturer has to pay as a result of the latest ruling in the so-called Dieselgate scandal.

Public prosecutors in Munich have handed the German automaker a massive fine of €800 million for producing six- and eight-cylinder diesel engines that pollute more than they're supposed to. That works out to over $920 million at current exchange rates.

The fine breaks down to €795 million for “disgorgement of economic benefits” and another €5 million for “negligent regulatory offenses,” Audi said in statement released last week.

In accepting the fine, Audi admits culpability for its role in the scandal that resulted from it (and other members of the Volkswagen Group of which it is part) implementing a “cheat device” that would mislead regulators about how much carbon its diesel engines were emitting. While this could spell the end of the affair for Audi, there could be more to come for its sister companies.

Suffice it to say, the penalty will have a substantial effect on Ingoldstadt's bottom line. “Considering these special items,” said the automaker, “the Audi Group will significantly undercut major financial key performance indicators forecasted for the fiscal year 2018.”

Last year, the Audi Group (which also includes Lamborghini and Ducati) recorded pre-tax net profits of €4.78 billion, of which the fine would represent roughly 20 percent. Audi will continue manufacturing diesel engines and the vehicles they power, but has been putting an increased emphasis on electrification, epitomized by the launch of the all-electric E-Tron crossover.