This week, Volkswagen announced details of the recall that will take place throughout the European Union beginning in January 2016. German regulators pressed the company to begin the recall which will affect 2.4 million VW and Audi vehicles in Germany,and a total of 8.5 million throughout the European Union. Indeed, EU member states are working closely together to coordinate the recall and ensure that Volkswagen be held accountable for each and every vehicle affected.
In the United States, the EPA has the legal authority to pursue a similar course of action by setting a definitive timetable for the recall. They have yet to do so. That is because they believe it is best to test the new software Volkswagen has provided to ensure its accuracy before the recall is initiated. However, most analysts expect that the US recall will be timed to coincide with the recall taking place in Europe.
Should the software patch pass the tests the EPA is putting it through, it will serve as a solution for 90,000 of the 482,000 vehicles sold within the United States. Specifically, those with 2.0-liter engines that were installed in Volkswagen Passat, Jetta, and Golf vehicles. The software is also expected to be applied to the Audi and Skoda brands.
It remains unclear what solution will be proposed or initiated in regard to the remaining vehicles affected by the VW emissions fraud. However, it is possible these vehicles will require entirely new engines and computers for them to meet stringent emission standards that keep nitrogen oxide emissions to a minimum.
The scandal has forced Volkswagen CEO, Dr. Martin Winterkorn, to resign even as the company insists he had no knowledge of the fraud. It is almost certain that criminal charges against will be filed against him and other members of the company’s board in the very near future. Over the coming weeks and months, resignations and terminations are expected to follow as it is determined who was involved in the fraud.
This is not counting the impact the VW Diesel recall will have on Volkswagen production and the very real potential for company wide layoffs. Just this week, the company announced that it would be cutting investments by over $1.1 billion per year through 2019. It is a decision that is tied directly to the company’s preparation for the massive fines, lawsuits, and recall expenses that are pending around the world.