VW Scandal Widens as Fallout Rains Down

Published on October 29, 2015, by Matthew Sharp

Product Liability

VW Scandal Widens as Fallout Rains Down

The fallout from the VW and Audi emission lawsuits is beginning to rain down within cities and offices around the world. As investigators begin to uncover the extent of the fraud, it is becoming clear that it was much greater than initially estimated. Indeed, it is becoming clear that there is much more to discover and that the investigation may very well close the company doors forever.

This past week it was discovered that EU officials were aware that car manufacturers were deliberately and flagrantly cheating emission testing standards. A letter written in February 2013 by the EU’s Environmental Commissioner, Janez Potocnick, to Industry Commissioner, Antonio Tajani, indicates that several EU countries had voiced concerns that there were significant discrepancies between testing data and real world performance. In Potocnik’s letter, he cited information that indicated a number of vehicles had been shown signs they had been tailored to meet rigorous testing standards, but that in real world conditions, the emission performance showed notable increases in the emission of pollutants.

At the time, Mr. Potocnik requested Mr. Tajani require remedial action on the part of automakers to correct the situation, or face a ban on the sale of the offending models. Mr. Tajani rejected this request. Now the Vice-President of the European Parliament, Mr. Tajani is claiming he tried to introduce the “real world driving emissions” tests that Mr. Potocnik requested even though the evidence stands to the contrary.

While the VW and Audi emissions lawsuits scandal will no doubt uncover more about what officials knew and didn’t do, it is having a more immediate impact in the present. Volkswagen has suspended a considerable number of its engineers. These individuals vary in rank from senior executives all the way down the line. These men and women were in positions where they were potentially involved in the planning and execution of the scam. It is unknown whether the company plans to suspend more employees, however, this move and others are creating a considerable aura of distrust within the company. These suspensions are expected to last for several months and will have a negative impact on Volkswagen operations as the company attempts to move forward.

In turn, company representatives are showing concern that a “brain drain” is about to take place. Fearing for both the viability of their careers with the company as well as their professional reputations, it is quite possible that many talented minds have begun the process of seeking employment elsewhere. Should this occur, it will make it considerably more difficult for Volkswagen to remain competitive within the automobile industry as a whole. In turn, this will lead to diminishing stock values which will have ramifications for the $40 billion Euro investor lawsuits that are being filed right now.

Beyond government offices and the boardroom, the scandal has begun to trickle down into the pocketbooks of VW owners across the world. Not only are they facing mounting repairs that will need to be completed in order for their vehicles to be made legal for operation, they are facing severe decreases in resale value. Online car sites are reporting decreases in price by 4.5% or more on most models. They are also noting sharp decreases in the number of potential buyers searching for vehicles potentially affected by the scandal.

Without question, the long-term value of the vehicles named within the VW and Audi emission lawsuits is in jeopardy. In the past, the company had a reliable reputation within the used car market, however, that reputation has all but evaporated in the presently polluted atmosphere. Indeed, it is become apparent that it will take a long time for the smoke to clear and for prices to stabilize. This could end up costing Volkswagen and Audi owners several thousand dollars each as they attempt to offload their vehicles.

In response, company executives are openly resisting calls for buyback programs. Instead, they have chosen to offer current owners $2,000 “loyalty bonuses” towards the purchase of new vehicles. This move has been met with both disdain and condemnation from vehicle owners who no longer trust the Volkswagen brand.

All of these factors are coming together to negatively impact the company’s long-term viability. Thus, Volkswagen owners whose vehicles are named in the VW and Audi emission lawsuits should not delay in seeking remedy. The longer they delay, the less likely the company will be in a position to pay claims and provide reasonable remedy. While the company is trying to stay afloat as the scandal deepens, it’s becoming clear that the depth of the self-inflicted wound and the spreading ramifications are far greater than first anticipated. Those vehicle owners who wait for the company to “do the right thing” are going to be waiting for a solution that isn’t going to pull into their driveway anytime in the near future.