Volkswagen is getting barraged from all sides after being caught at, and ultimately admitting to, purposely loading software into its catalytic converter computers that falsified emissions information.
On Sept. 22, Volkswagen admitted that there were far more vehicles affected by the installation of this software: an estimated 11 million—a tad more than the 482,000 first mentioned.
On Sept. 21, the U.S. Department of Justice opened a criminal investigation into whether Volkswagen systematically tried to deceive regulators into believing that exhaust emissions from their turbo-diesel-powered vehicles were well under limits as set forth by federal and state air quality agencies.
Later on Sept. 21, a class-action lawsuit was filed on behalf of California resident and 2012 VW Jetta Sportswagon CleanDiesel owner David Fiol. The complaint seeks class-action status both nationally and in California, unspecified punitive damages and legal fees, among other things. The plaintiff is seeking a jury trial.
On both days, investors bailed out of Volkswagen stock, sending the price plummeting by 19 percent the first day and by another 18 percent Sept. 22.
Volkswagen said Sept. 22 that it has set aside $7.3 billion to fix the software that manipulates emissions tests. The German automaker will likely need to scrape up a lot more than that before this scandal is over.
Only a few days into the public knowledge of the scandal, the surprising admissions by Volkswagen immediately make this one of the most expensive automotive scandals in history.
The crisis also seriously threatens to derail the company’s quest to become the world’s largest automaker; Volkswagen had gained the No. 1 spot from Toyota for the first six months of 2015.
“This could damage the Volkswagen brand globally for years to come,” former automotive marketing executive Peter De Lorenzo, blogger at Autoextremist.com, told USA Today. “Trust and belief in the brand has been broken.”
For background purposes:
The U.S. Environmental Protection Agency (EPA) alleged Sept. 18 that German vehicle makers Volkswagen and Audi sold 482,000 diesel vehicles in the U.S. that carried a so-called “defeat device”—illegal emissions control software designed to make cars appear to run cleaner in testing situations than they normally do.
On Sept. 21, the plot thickened when The New York Times reported that Volkswagen officials told the EPA for nearly a year that discrepancies between the formal air quality tests on its diesel cars and the much higher pollution levels out on the road were the result of technical errors, not a deliberate attempt to deceive Washington officials.
Under pressure, Volkswagen backtracked earlier this month, admitting that defeat device software was included on VW and Audi vehicles from the 2009-2015 model years with 2.0-liter turbo-diesel engines. Specifically, the emissions-cheating software was found in four-cylinder diesel passenger cars that include the Passat, Beetle, Jetta, Golf and Audi A3.
Now the number has been raised to 11 million cars and trucks.
In a company statement, Volkswagen CEO Martin Winterkorn pledged to regain the public’s trust and rectify the company’s mistakes, amid speculation that he could lose his job over the crisis. In an interesting bit of timing, Winterkorn’s contract is up for renewal at the automaker’s board meeting Sept. 25.