Volkswagen Is Facing Attacks From Every Side
Brian O Sutter
Recalls
VW had to know that it was in for some stormy months or even years following the EPA’s accusation that it was using defeat devices to fool pollution regulators. The company at least had the sense to admit what they had done right away and to air out all their dirty laundry so that the scandal wouldn’t drag on any longer than necessary, but at the same time Dieselgate isn’t like an ordinary recall scandal where a company decides to keep quiet after discovering and fixing a defect.While most car defects are caused by mistakes or oversights, VW’s defeat devices were very much an intentional part of their cars’ designs, and it’s because of this that the company is now facing pressure from just about every angle possible.
Government Regulators
In the United States, both the EPA and the Department of Justice have filed civil lawsuits against Volkswagen to the tune of $46 million for violating the Clean Air Act and for cheating on its emissions tests. This is in addition to the fines and other penalties which the EPA and other regulators can assess without a court hearing. At the same time, VW’s initial idea for fixing its diesel vehicles has been soundly rejected both by the EPA and by California’s air pollution regulators, which likely means the next fix will either cost more or else upset diesel drivers by restricting the engines even further.
Volkswagen isn’t doing so hot outside the United States, either. South Korea’s regulators are filing criminal charges against the automaker, and much like the US they’ve also rejected VW’s initial recall proposal.
Customers
Particularly in the United States, Volkswagen’s advertisements stressed the (supposedly) environmentally friendly aspects of its diesel vehicles, which means a sizeable percentage of VW diesel owners are particularly concerned with the environment. Quite understandably, then, these owners were upset when they learned they were actually producing 20-40 times as much pollution as if they’d simply bought a traditional gasoline car. In fact, many of these diesel owners were activists even before the Dieselgate scandal broke, and they’ve organized petitions, advocacy groups, and protests demanding full refunds from Volkswagen at the very least.
Other diesel owners are heading straight to court. 14 Oregonians are suing VW not just for defrauding them with the defeat device but also for unfair competition practices – in other words, because Volkswagen was intentionally lying about what its diesel engines could do, it attracted customers who would have otherwise bought a car from another company.
Although there haven’t been any rumors from VW’s competition, this does mean that automakers and dealerships may have grounds for suing Volkswagen, too. For now, at least, it seems as though they’re content to watch VW’s fall from grace (and from the top sales position) and to enjoy what’s been an amazing year of sales.
Shareholders
Since Dieselgate began in late September, Volkswagen stock prices have dropped by nearly a third, and the company’s shareholders are not happy. As such, they’re suing the company over this significant loss in value in German civil courts, and while Germany doesn’t have class action suits that let everyone with a valid grievance take part in a single court ruling, they do have capital market model claims, a special case type which serves as an example for how much the court should award for any similar complaints.
Now that governments and private individuals are starting to attach some solid numbers to their civil claims, it’s becoming a little clearer as to how much money the grand total may be in terms of the direct costs of Dieselgate, although the loss in reputation and sales may ultimately make the defeat devices the single costliest mistake in all of VW’s history. But with the first lawsuits still just entering the initial discovery phase, Volkswagen shouldn’t expect to see an end to this scandal anytime soon.