VW Delayed Revealing Diesel Cheating in Hopes of Quick Deal

Volkswagen AG admitted to U.S. regulators on Sept. 3 that it had rigged diesel engines to evade emission standards. But it tells a German court it waited two weeks to publicly reveal the cheating in hopes of reaching a deal to limit the cost of fixing the vehicles.

VW has begun repairing some 8.5 million affected diesels in Europe. But it still has no agreement with American regulators about how to repair 580,000 diesel-powered Audi, Porsche and Volkswagen brand cars and crossover vehicles in the U.S.

The company revealed its bargaining strategy in a report submitted a week ago in response to a lawsuit in Germany. The shareholder complaint says VW failed to inform investors promptly about the cheating. VW contends that announcing the issue sooner than it did would have jeopardized the negotiations.

But the tactic didn’t work. Last week VW brand chief Herbert Diess said VW may be months away from a recall settlement in the U.S. A resolution will impact a separate lawsuit by the U.S. Dept. of Justice that in theory could penalize VW as much as $48 billion for violating American emission laws.