South Korea has become the first country outside the United States to punish Volkswagen AG on the basis of its own emissions tests. As Hayley Platt reports, it's slapped the German automaker with a record fine and ordering a recall of 125,522 vehicles.
It's two months since Volkswagen admitted rigging diesel emissions tests in some of its cars. Now South Korea is adding to its pain after tests were carried out by the environment ministry. (SOUNDBITE) (Korean) DIRECTOR OF ENVIRONMENTAL TRANSPORTATION DIVISION AT SOUTH KOREA'S ENVIRONMENT MINISTRY, HONG DONG-GON, SAYING: "We have tested seven Volkswagen vehicles of six models and we found that diesel emission devices approved before September last year were manipulated." South Korea is the first country outside the US to announce measures based on its own testing. It's fined Volkswagen Korea $12 million and ordered it to recall 125,000 cars. Simon French from Panmure Gordon thinks there's more to come. (SOUNDBITE) (English) SIMON FRENCH, CHIEF ECONOMIST, PANMURE GORDON, SAYING: "It isn't as broad as some people had feared but the challenges are not going to go away. There are legislative challenges, the courts in multiple jurisdictions are going to be sharpening their pencils and looking at what money can be got out of Volkswagen going forward. So they're far from out of the woods but I think they're at least making the pace." VW's shares have been recovering, rising another 3 percent despite the recall. The auto maker says the cost of fixing the 8.5 million vehicles effected in Europe isn't as much as thought. But it has no plans to lower its planned provisions of 6.7 billion euros. And is still seeking as much as 20 billion euros in funding from banks to help cover fines, legal claims and vehicle refits. Some analysts believe they could end up needing twice that.