VW has admitted to concealing a $1.4 billion hole in their import tax payment, a revelation that hints at systematic evasion.

Volkswagen has been accused by the Indian government of evading taxes by misdeclaring and misclassifying imports of car components. The company is accused of evading $1.4 billion in taxes, which is a significant blow, given its global sales of 8.26 million vehicles in 2022 and revenue of $293.83 billion. The company’s Indian unit, Skoda Auto Volkswagen India, has responded by saying it is a “responsible organization that complies with all global and local laws and regulations” and is cooperating with authorities. If found guilty, Volkswagen could face penalties of up to 100% of the amount evaded, amounting to a total of $2.8 billion. This is a significant blow to the company, which is already facing disputes with its labor union in Germany over plant closures and layoffs, and increased competition from Chinese automakers.