Volkswagen has set aside $7 billion for the recall of fixing the affected diesel vehicles globally and could attract fines and penalties as high as $18 billion in the US alone. The CEO of Volkswagen, Martin Winterkorn has resigned.

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There’s no simpler way of saying this, ‘Volkswagen screwed it up’ and big time. One of the forerunners in automotive excellence, the German automaker is accused of diesel engine emissions test cheating in the US, which has made waves across the globe with the final impact quite visible at the company’s headquarters in Wolfsburg, Germany. USA’s Environmental Protection Agency (EPA) found the automaker’s diesel engines to violate the Clean Air Act and were emitting over almost 40 times than the allowable limit of nitrogen oxide in real world conditions, while a defeat software manipulated the results in lab conditions. As seen in the ad above, Volkswagen clearly played with customer sentiments pushing a false claim.

After initially accepting to around 5 lakh vehicles being affected under the diesel scandal in the US, Volkswagen stated that around 11 million vehicles globally were fitted with the manipulative software and the diesel engine with most vehicles being in Europe. It wasn’t until the EPA threatened the automaker to withhold certification on 2016 vehicles that it admitted to the discrepancies. Over the past days, Volkswagen CEO Dr. Martin Winterkorn has repeatedly apologised for the scandal and has now resigned over the issue.

Porsche boss Mr. Ferdinand Piëch that holds a majority of shares in the Volkswagen Group could take over from Winterkorn in light of the scandal. That said, the diesel issue has prompted other countries (including India) to re-evaluate Volkswagen diesel vehicles and is going to cost the company a fortune. Make sure to check out Dr. Winterkorn’s apology statement at the end of this post.

Important Facts About Volkswagen’s Emission Cheating Scandal

– Since 2009, Volkswagen has been installing a software on its diesel vehicles that tracked vehicle steering and pedal movements, and automatically turned the pollution controls on if it was being tested in a lab, while the software was switched off rest of the time.

– 11 million cars from Volkswagen worldwide fitted with the ‘Type EA 189’ diesel engine are affected by the scandal.

– The manipulated diesel cars do not pose a life threat to drivers or occupants and can be driven freely.

– The diesel engines spew up to 40 times than the allowable pollution limit of NOx in the US.

– The affected vehicles include the Jetta, Golf, Beetle and Audi A3 models produced from 2009-2015 and Jetta models from 2014-2015.

– Volkswagen has set aside $7 billion (Rs. 47,800 crores) to cover the necessary service measures and other efforts required to win back customers’ trust.

– EPA authorities could levy fines as high as $18 billion (Rs. 1,22,914 crores) on Volkswagen in the US.

– Volkswagen already lost around 20 percent or one-third of its market capital after share prices plummeted in the US, edging towards a $30 billion (Rs. 2,04,857 crores) loss.

– Diesel cars represent less than 1 percent of the US auto market share.

– European countries including Germany, Italy, France, Switzerland along with South Korean also plan to investigate if the Volkswagen diesel vehicles meet their respective emission tests.

– Not the first time Volkswagen has cheated on emission tests in the US, the automaker paid $1,20,000 in 1974 after violating emission control rules by placing a defeat device that deactivated part of the emission control system.

– Sales of 2015 and 2016 Volkswagen and Audi cars with TDI engines will be stopped in the US for some time while all affected cars will be recalled.

Volkswagen’s target of becoming the world’s number 1 automaker later this decade now seems a distant dream.

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