Impacts on the Volkswagen Emission Scandal
In 2015 the Environmental Protection Agency (EPA) issued a notice of violation towards the German automaker, Volkswagen. The violation was aimed at Volkswagen’s illegally installed vehicle software programs, that helped their automobiles pass emissions testing. After this news was discovered and released, Volkswagen had a recall campaign for all of their faulty vehicles. This eventually led to a serious impact towards the company. Volkswagen incurred costs for recalling vehicles, their sales were gradually suffering, and investors are unhappy with the company.
Volkswagen’s Emission scandal has caused some serious consequences for the company. VW has issued a costly vehicle recall campaign. BBC.com articulates that, “VW will recall 8.5 million cars in Europe, including 2.4 million in Germany and 1.2 million in the UK, and 500,000 in the US as a result of the emissions scandal” (Hotten,2015). Based upon the recall of 500,000 U.S. vehicles, Coral Davenport and Jack Ewing from the NY Times stated, “Under the terms of the clean air act, the justice department could impose fines of as much as $37,500 for each recalled vehicles, for a possible total penalty of as much as $18 billion” (2015). Since VW is planning on recalling their vehicles, it has the potential to discontinue pollution emissions from their vehicles. “During normal driving situations, the control is turned off, allowing the cars to spew as much as 40 times as much pollution as allowed under the clean air act” (Davenport & Ewing, 2015). It Is clear to see that the emissions software implemented by VW is illegal by making their vehicles seem more fuel efficient. After the EPA caught VW in their illegal actions, the EPA has planned further watch over the company.
Once the news on the emissions scandal was released Volkswagen U.S sales felt the effects immediately. The company admitted that it installed illegal software in 482,000 vehicles in the U.S. This caused the company’s most popular models in the U.S. to take on huge setbacks. According to an article on US Today, “Sales of the Jetta sedan suffered a huge blow, falling 36.1% to 8,551 Vehicles” (Boomey,2015). The article also stated that, “the Beetle posted a 34.1% decline to 1,279 units” (Boomey,2015). However, those models weren’t the only faulty vehicles, other vehicles under the VW owned brand, Audi, also contained the illegal emission software as well. The scandal has seemed to a create a lack of customer trust with the Volkswagen brand. Fortune.com claims that, demand for Volkswagen brand models have dropped a total of 10% in the United States (Reuters,2016). Writer Julia Kollewe from the Guardian specified that in 2016, “Volkswagen’s profit tumbled nearly 20% at the start of this year as car sales continued to fall” (2016). The future doesn’t seem too bright for the VW brand. Hopefully, the company can build their cars correctly and regain customer trust.
VW is also facing some serious court consequences as well. A lot of VW’s investors were unhappy with the emission scandal. According to www.rt.com, “The investors claimed that they suffered damages because the company was slow in disclosing the issue” (2016). “Last year Volkswagen shares lost more than a third of their value in the first two trading days in Germany after the manipulations were uncovered by US regulators” (www.rt.com, 2016). So in response to the scandal the investors are suing VW. Now, “German car maker VW faces 8.2 billion euros in damage claims from investors over their losses following the emissions scandal” (www.rt.com, 2016). The U.S. is also among these investors suing and are aiming to receive around $32 million dollars. VW is currently trying to renegotiate these lawsuits. The company feels that European consumers don’t need to be compensated for their losses because VW has been informing the public about the emission scandal disclosure in a timely manner.
The Volkswagen emission scandal has built a bad reputation for the company Internally and externally. VW’s customer and investors are losing trust with the company. This lack of trust has impacted the sales of the company as well as their investments. At the same time VW’s investors are aiming to be compensated for their losses within the scandal. When it is all said and done, VW will be spending a ton of money to help solve this emissions scandal. On top of that the EPA will keep a close eye on the company until they fix their vehicles and regain trust. Hopefully, VW will do whatever they can to find a solution to this problem and continue to let the company thrive.
Bomey, Nathan. "Volkswagen U.S. Sales Feel Effects of Emissions Scandal." USA Today. Gannett, 03 Nov. 2015. Web. 14 Nov. 2016.
Davenport, Coral, and Jack Ewing. "VW Is Said to Cheat on Diesel Emissions; U.S. to Order Big Recall." New York Times. N.p., 18 Sept. 2015. Web. 14 Nov. 2016.
Hotten, Russell. "Volkswagen: The Scandal Explained." BBC News. N.p., 10 Dec. 2015. Web. 14 Nov. 2016.
Kollewe, Julia. "VW Profits down 20% after Diesel Emissions Scandal." The Guardian. Guardian News and Media, 31 May 2016. Web. 14 Nov. 2016.
Reuters. "VW Sales Still Tumbling on Emissions Scandal—Though Not as Fast." Fortune VW Sales Still Tumbling on Emissions ScandalThough Not as Fast Comments. N.p., 14 Apr. 2016. Web. 14 Nov. 2016.