Sales of Volkswagen (LSE: 0P6N.L - news) -branded cars in Britain will fall in the first quarter, hit by the diesel emissions scandal, but strong orders mean there are signs the carmaker is bouncing back, its United Kingdom managing director said on Tuesday.

Pearson cut his estimate of VW's legal liability by 1 billion euros (US$1.1 billion) to 10.7 billion euros and raised his target price by 2 euros to 138 euros, keeping his "outperform" rating. The company also must account for the cost to fix or buy back the affected cars.

The company issued the statement in response to a German shareholder lawsuit accusing the company of failing to properly disclose the potential cost of the scandal when it first erupted.

Volkswagen issued the statement to reject shareholder accusations that it did not inform them of the looming problems in time, causing them massive losses.

In the ensuing period, in order to resolve this conflicting objective satisfactorily within the timeframe and budget of the EA189 project, according to the current state of knowledge, a group of persons - whose identity is still being determined - at levels below the Group's Management Board in the powertrain development division, made a decision to modify the engine management software.

Spurs paying the price - boss
Not on this night, though, on Tottenham's last-ever trip across east London to the soon-to-be demolished Upton Park. Losses happen, and it's better to be able to say that Spurs finished the match strongly than otherwise.

At this point, VW management realised that "the modification of the engine management software constituted a prohibited defeat device under U.S. law" and VW said that it would "communicate this information transparently to CARB and EPA".

CARB has asserted that this recall did not change the discrepancy between emissions in the lab and emissions on the road for the diesel vehicles.

Martin Winterkorn, former Volkswagen CEO. It did not specify who sent the memo and did not say whether Winterkorn actually read it. "For global automobile manufacturers, service measures and recall campaigns are nothing out of the ordinary". VW said it had filed a statement of defence with a German regional court in Brunswick in relation to the claims.

Despite Winterkorn receiving a memo in May 2014 about a study raising questions over the disparity between the real-world smog levels his company's diesel vehicles were responsible for and results from government tests, Volkswagen say the problem "did not initially receive particular attention at the management levels".

On July 27 previous year, "individual Volkswagen employees" discussed the diesel issue on the sidelines of a regular meeting attended by Winterkorn and VW brand chief Herbert Diess, Volkswagen said. "Mr. Winterkorn asked for further clarification of the issue".