Volkswagen to pay back millions in subsidies to Spanish government

Volkswagen has promised to reimburse the Spanish government millions of euros invested in a subsidy for car buyers, following the news that the scandal surrounding the German company has widened to include CO2 emissions.

In recent years, the Spanish government has contributed up to €1,000 to a subsidy for car owners who trade in their old vehicle for a new one. The scheme, known as the ‘PIVE’ plan, has sought to provide a boost to the car industry and reduce CO2 emissions.

VW has admitted this week that 800,000 of its cars worldwide have faulty CO2 emissions. On Wednesday, the company told Madrid that about 50,000 of its cars in Spain were affected.

In a radio interview on Thursday, industry minister José Manuel Soria said that VW pledged to pay back any subsidies if it was liable. If all the cars affected were bought as part of the PIVE subsidy plan, VW would have to pay the government €50 million, Mr Soria confirmed, although he said checks would be made “vehicle by vehicle”.

Volkswagen board of management member Francisco García Sanz, a Spaniard, issued a statement in which he promised to keep the Spanish government abreast of any new development “[A]s a result of the willingness to be transparent and honest that we have acquired within the framework of the investigations into the emissions.”

When the VW scandal first broke in September, the Spanish government announced its intention to claim money back from the company due to its investment in the PIVE subsidy. However, when VW insisted that the case revolved around Nitrogen Oxide emissions, not CO2, the Industry Ministry changed its mind.

But the latest development has shifted the Spanish government’s stance yet again, although it has not said how it will go about reclaiming the money.

Nearly 700,000 cars with the faulty EA189 engine which sparked the original scandal were sold in Spain.

This week VW confirmed that despite its problems, it plans to continue with a €4.2 billion investment in two car factories in the north of Spain.