Shares in German auto maker Volkswagen (VLKAF) (VLKAY) , (VLKPF) , (VLKPY) accelerated away at the start of trading in Frankfurt on Tuesday, as the German market got its first chance to react to the company's $14.7 billion settlement deal in the U.S. over its diesel emissions cheating scandal.
The share gained 4% to a high of €125.90 ($139.40), before braking gently to fall back to €123.70, by 11:00 a.m. local time, still up 2.23% on Monday's closing price of €121.00.
Wolfsburg, Germany-based Volkswagen reached a proposed agreement with the U.S. federal government and lawyers for the owners of affected vehicles, in what has been described as one of the largest consumer class-action settlements ever in the United States.
But the deal, which involves an offer to buy back the car or have in fixed to meet U.S. emissions standards, plus payment of an additional cash compensation amount to the owner, is still subject to approval by a federal judge. The emissions fix would also still be subject to approval by the Environmental Protection agency.
And the beleaguered carmaker is under increasing pressure both in Europe and worldwide to match the compensation to U.S. consumers in its home market and elsewhere.
European Union industry commissioner Elzbieta Bienkowska repeated her calls for compensation at the weekend, telling journalists "Volkswagen should voluntarily pay European car owners compensation that is comparable with that which they will pay U.S. consumers."
The former Polish deputy prime minister has been unimpressed with Volkswagen's claim that it has not done anything illegal under EU law and consumers here are not entitled to compensation.
"Treating consumers in Europe differently than U.S. consumers is not way to win back trust," she has previously said.
Under the terms of the deal, which reports said will be filed later today in a San Francisco court, VW will set aside up to $10.03 billion to cover costs including buying back up to 475,000 vehicles at the cars' value before the scandal broke last September.
According to U.S. media reports Volkswagen will also pay $2.7 billion into an Environmental Protection Agency fund to compensate for the environmental pollution caused by "cheat technology" that enabled the cars to pass emissions test but still exceed pollutions limits when on the road.
The company also agreed to spend $2 billion on new cleaner vehicle development.
Group spokesman Andreas Hoffbauer said this morning, he could not comment on the details at this stage but that the company would issue a press release once the filing had been made with the court and after the judge and the DoJ had made their own announcements. That was expected to happen at about 8 a.m. EST.