Another wave of fallout from the Volkswagen diesel emission scandal could be coming later this week in a German court. Reuters reports that Germany’s federal administrative court will be ruling whether or not local governments could ban diesel vehicles.
Environmental group DUH sued the Stuttgart and Duesseldorf governments for over levels of diesel particulate matter exceeding European Union limits after Volkswagen admitted to cheating on emission tests. Local courts ordered the governments to ban diesel vehicles that don't conform to current EU standards on days when pollution is bad. The two states where a number of automakers and suppliers reside appealed the decision to the federal administrative court.
This move could cause serious damage to German automakers as it would cause a fall in resale values and overall sales. Investment Evercore ESI forecasts a five percent drop in diesel residual values, resulting in a loss of 1.6 billion Euros (about $2 billion) in operating profit "across eight European and U.S. carmakers."