The Fall of An Automotive Empire

In recent news, it has come to light that the German automotive company Volkswagen (VW) sold hundreds of thousands of diesel engine vehicles with EPA test cheating devices installed on them to the United States. They also sold millions of vehicles with the devices worldwide. Here is an overview of what happened and what you need to know if you own a diesel VW.

The beginning of the end came for Volkswagen when Daniel Carder, an engineer for West Virginia University led a research team in a $50,000 study funded by the International Council on Clean Transportation (ICCT). Vehicles are required to meet certain emission standards so that they aren't polluting the environment. VW claimed that their cars met the standards, boasting high mpg rates as well. But Carder's numbers showed a huge difference in what VW was claiming and what the reality was. At first, there were so many discrepancies in their results that Carder thought they had performed the tests wrong. In an interview with Reuters, Carder said, "The first thing you do is beat yourself up and say, 'Did we not do something right?' You always blame yourself."

"(We) saw huge discrepancies," he added. "There was one vehicle with 15 to 35 times the emissions levels and another vehicle with 10 to 20 times the emissions levels."

The results were presented to the public about a year and half ago.

"We actually presented this data in a public forum and were actually questioned by Volkswagen," said Carder.

Their research was consequentially corroborated by the Environmental Protection Agency (EPA) and the California Air Resources Board, who then demanded in May 2014 that the company fix the problem. The company at that point claimed that it had. But further testing was done, and the problem was still there.

Last Friday, September 25th, the EPA announced publicly that Volkswagen had violated the Clean Air Act and demanded that the company fix the affected vehicles, which include the diesel TDI versions of the Golf, Jetta, Beetle and Passat.

On this past Tuesday, VW admitted to installing software on those vehicles that would fool emissions regulators, causing the discrepancies in numbers.

On Wednesday, Volkswagen CEO Martin Winterkorn announced his resignation. VW's stock price has been plummeting and has already lost 1/3 of its market cap in the past week. The company has set aside 7.2 billion dollars in anticipation of the cost to fix the vehicles.

The video below explains exactly how the cheating device worked.

Here are some things diesel VW owners need to know:

• Cars affected by the scandal include Volkswagen and Audi models powered with 2-liter, turbocharged diesel engines: VW Jetta TDI (model years 2009-15), VW Beetle TDI (model years 2009-15), VW Golf TDI (model years 2009-15), VW Passat TDI (model years 2014-15) and Audi A3 TDI (model years 2009-15).
• There is no action required of vehicle owners at this time.
• You can still get your vehicle emissions tested if it is due.
• Volkswagen will communicate with vehicle owners directly once they have decided on a course of action, either fixing the vehicles at their expense, or buying them back from the owners.
• Resale value may be affected by about 8%, according to Kelly Blue Book, but it depends on how Volkswagen decides to handle the problem.
• Law suits have already been filed against Volkswagen and since they are class action lawsuits, all vehicle owners will be included.

The Volkswagen drama is still unfolding and the coming days will tell just how much money the company will be out because of this scandal. The real question now is, will Volkswagen survive this storm or will this end in bankruptcy for the automotive giant?