The VW Emissions Scandal
The VW $14 Billion Fiasco
Recently, the US Courts made a ruling that will punish Volkswagen of Germany for its deliberate and deceptive corrupt diesel car emissions. Brought on by California, as time went on, it also involved VW’s sold in Europe. It was the mother of all scandals by a carmaker that continues to shock.
In a nutshell, 2009-15 model VW diesels were fitted with special software. It was able to detect the difference when the car was being tested and when it was not being tested. When the car was being tested for smog, the results were skewed to allow it to pass with lower emission results (when in reality, they were many times higher than allowed when driven and not being tested). Nitrogen dioxide, or NO2, the most harmful form of NOx, is linked to respiratory irritation, asthma and premature death.
The VW diesel is a fairly clean car for most U.S. states, but California is different. What passes for emission in most other states, would fail in California with its stringent emission levels. The selling point is that even from early 2004 models, their MPG is a phenomenal 30\45 in most cases. Diesel models before 2009 are not included in the present legal action. Thus, VW had the edge for sure on the great gas mileage since 2004. Once you own a diesel, it is hard to get use to a MPG of 25\30, and unlike the diesels of the 1980’s and 90’s, very little black smog appears from the exhaust. VW managed to have clean diesel.
The recent agreement has VW paying almost $15 billion to settle civil claims. The Court said, “VW turned nearly 500,000 American drivers into unwitting accomplices in an unprecedented assault on our country’s environment with the most flagrant violations of U.S. environmental and consumer laws in American history”.
Wow. Ouch. VW dreams of being the top car selling dog in the USA have long gone. They are simply praying they will not collapse because Europe wants the same compensation as the Americans got. There 9 million VW’s in Europe. It would cost $50 billion there. Already, VW has indicated, “No Way”, will that ever happen. That is another battle front for VW. Thus, the storm clouds continue to swirl. Investigators are still looking at 1.5 million VW documents for criminal indictments of German officials who new and order the cheating software. Oddly, the former VW president resigned prior to the scandal exploding.
Some $10 billion is slated to go to consumers who bought the cars (Jettas, Beetles, Passats, Golfs, Audi A3). Another $2.7 billion will go to environmental remediation fund and another $2 billion to repair the cars. Some 44 states in the USA have pending legal action. VW must get 85% of the diesels fixed or they will banned in the USA by 2019.
The problem also applies to 85,000 3-liter diesels sold by Porsche and Audi. VW dealers are forbidden to sell any 2009+ diesel. Non-VW dealers and private parties may sell them. Because of the scandal, they are much cheaper to buy now.
What to Know
If you bought your car before September 2015, VW will later this year offer a buyback between $5,000 -10,000 dollars. They will offer the owner to repair the car at VW expense, if the car is kept. For those who bought one of these model years after September 2015, it is unclear if there is a buy back since most likely the car was bought “used”. However, VW will have to fixed the car and notify them, free of charge. Many Jetta diesels are selling for 33% less because of the scandal. If you buy a used diesel now (in 2016) you will still be able to register it with Calif.\New York DMV and drive the car despite the emissions (since there is no fix yet). Those who qualify for a buy back will have two years to make the decision. Also, VW will also give those who qualify at least $5000 for the deception factor whether they sell back their car or not.
The Judge will decide the terms of the settlement on July 26, 2016. Most likely they will and VW has set aside $18 billion to handle the damages. VW is also prohibited from reselling any of the cars in the USA or elsewhere unless they fix the cars first. If the agreement is approved, qualified owners may get VW offers as early as October, 2016. The scandal continues to grow in Europe with 630,000 Mercedes, Audi, VW and GM cars being recalled to fix emission software.
The never ending story.