Business & Tech

German police raid Audi offices, escalating Volkswagen diesel inquiry

The headquarters of German car maker Audi is pictured in Ingolstadt, southern Germany, on March 15, 2017. State prosecutors in southern Germany said they had searched offices belonging to carmaker Audi over parent company Volkswagen's diesel emissions cheating scandal. / AFP PHOTO / Christof STACHECHRISTOF STACHE/AFP/Getty Images

CHRISTOF STACHE/AFP/Getty Images

The headquarters of German car maker Audi Ingolstadt, southern Germany.

FRANKFURT — A criminal investigation of Volkswagen’s diesel fraud escalated on Wednesday after authorities in Germany searched offices of the automaker’s Audi luxury car unit, threatening a crucial source of badly needed profit.

The new Audi investigation by prosecutors in Munich, along with a separate criminal inquiry into Volkswagen out of Braunschweig, are keeping the carmaker on the defensive as it tries to move past the emissions-cheating scandal.

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Volkswagen has already agreed to pay $22 billion in penalties and settlements in the United States, and pleaded guilty to its vast emissions deception, which involved a variety of Volkswagen, Audi, and Porsche-branded vehicles. Six Volkswagen executives face criminal charges in the United States, and the company is grappling with further legal action in Europe, where dozens of senior staff members — including its former chief executive — are being investigated.

In Europe, authorities are pursuing different threads from the same deception.

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Prosecutors in Munich said the raids were part of a criminal investigation of Audi’s behavior in the United States, where its parent company has admitted installing software in diesel engines to deceive regulators about how much the cars polluted.

The Munich investigation hits directly at a major profit center.

Audi produces a disproportionate share of Volkswagen’s profits, so any damage to its image would have particularly grave consequences. Luxury models like Audi’s A8 luxury sedan or its Q7 SUV accounted for about 15 percent of the vehicles sold by Volkswagen last year, but produced a third of its $15.5 billion operating profit.

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The raids Wednesday took place at Audi’s offices in the Bavarian city of Ingolstadt and other locations around Germany, including seven residences. They came at an especially embarrassing time for company executives, who were holding Audi’s annual news conference Wednesday and had to endure persistent questioning about the raids.

Rupert Stadler, the Audi chief executive who is also a member of Volkswagen’s management board, told reporters that as far as he knew his home had not been searched. Stadler said he did not observe any police officers when he left for the office early Wednesday and that “my wife hasn’t called me.”

Munich prosecutors did not identify any suspects in the investigation, saying the raids were designed to help determine who was responsible for wrongdoing in the United States.

Investigators in Braunschweig are also looking at criminal behavior as well as securities violations by Volkswagen. Audi and Volkswagen are the subject of separate inquiries because their headquarters fall in different German jurisdictions.

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