Volkswagen Spinning Wheels in Diesel Scandal

By Kevin Belanger,
International Business Writer

Volkswagen has been forced to go into damage control mode as it has been rocked by allegations that it planted a device in its diesel cars to modify their engine performance during emissions tests. According to the BBC, the device was designed to recognize that a car was in a testing environment by detecting the motions typical of a car on a test machine. Volkswagen has aggressively targeted world markets with its diesel vehicles, which it touted as being more efficient than conventional gasoline engines. However, the device was designed to mask the fact that the actual emissions outside of testing were up to 40 times the legal limit in the United States.

According to the EPA, 482,000 vehicles in the United States have the device inside them and Volkswagen elaborated that over 11 million vehicles worldwide have the device implanted in them. Affected vehicles include those made by Audi and Skoda, in addition to Volkswagen cars such as the Golf, Jetta, and Passat. In response to such a major scandal, Volkswagen has fired its Chief Executive Officer.

According to Reuters, Volkswagen has started informing American consumers that specific cars have the device implanted in them. Volkswagen will tell Americans where to bring their cars to have the device fixed to display proper emissions during testing. However, the company has stated that it will take time to determine exactly how to fix each car type as the computer systems and engines are not exactly the same in each model.

As a result of the scandal, the BBC reports that France is looking into the possibility of “aggravated deception.” Likewise, Italy’s competition regulatory agency is planning to investigate Volkswagen for defrauding customers about the emission of its vehicles. Volkswagen has stopped selling diesel cars in the United States and recalled 500,000 cars, the BBC reports.

According to the New York Times, the United States will pursue an investigation concerning whether Volkswagen violated the Clean Air Act; several states have joined the investigation. Volkswagen also faces lawsuits in the United States concerning defrauding its customers. To add to Volkswagen’s trouble in the United States, its head of operations in the United States is expected to appear before Congress to answer questions about its vehicles. Even in Germany, Volkswagen is facing possible charges of fraud. Despite the possible investigation, Vice Chancellor Sigmar Gabriel stated that while Volkswagen’s conduct was unacceptable, the world should reserve judgement of the company and remember that Volkswagen’s employees should not suffer because of management decisions.

Volkswagen has earmarked 7.3 billion dollars to deal with potential legal issues and reimbursements to customers, according to CNN. However, Credit Suisse estimates that the cost of the scandal could reach 87 billion dollars, as Volkswagen struggles to provide the necessary repairs for vehicles. Credit Suisse also warned that dropping values of current Volkswagen vehicles will make it harder for Volkswagen to sell new products.

A version of this article appeared in the Tuesday, October 6th print edition.

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