Volkswagen are in turmoil after the United States Environmental Protection Agency last week revealed that the German car manufacturer had installed a clever piece of software into their diesel cars, which enabled them to fraudulently pass emissions tests. The so-called ‘defeat device’ meant the car could severely reduce its emissions during test conditions, whilst actually emitting up to forty times the amount of pollution allowed by regulations out on the road. The United States has demanded that Volkswagen recall almost half a millions cars produced since 2009.
The repercussions for VW could be vast: shares have already plummeted more than 20% and keep falling; the United States has threatened a fine of up to $37,500 per car, which would total at over $18billion; the French Finance Minister has called for an EU enquiry; tests on up to 5000 cars are to be done in South Korea; and there could be a real possibility of criminal convictions for top executive and lawsuits filed from shareholders and customers. It is not just VW hurting from this scandal too. With concerns that this kind of cheating may be rife within the industry as a whole, shares in other worldwide carmakers such as BMW and Renault have dropped by up to 5%.
The Volkswagen chief executive in the United States, Michael Horn, has admitted that the company had “totally screwed up”, saying “our company was dishonest with the EPA, and the California Air Resources Board, and with all of you.” He followed up by saying the cars need to be fixed, and the company needs to rebuild its trust with governments; with their dealers and customers; and with the public, to prevent something like this ever happening again. Volkswagen later said that 11 million of their cars worldwide have been fitted with the defeat device, and they will hold €6.5billion to deal with the scandal.
A report by the think-tank Transport & Environment (T&E) recently claimed that, “every major car manufacturer is selling diesel cars that fail to meet EU air pollution limits on the road in Europe.” Their assessments showed that, out of 23 cars tested, only three of them met the required emissions standards when on the road. If this is the case, this scandal may be the start of something much bigger.
