Volkswagen once dreamed of being king of the road by beating Toyota and General Motors in the car manufacturing game. Unfortunately, “Dieselgate” turned the dream into a nightmare when news broke out that the German manufacturer had been cheating on emissions tests by putting in software that calibrated toxic nitrogen oxide emissions during testing to register lower levels. But once the cars on the road, the “cheat software” allowed higher toxic emissions.
Unfortunately, a group of vigilant former US Environmental Protection Agency officials noted the discrepancy during a study on real driving emissions commissioned by the International Council on Clean Transportation—and this “cheating” scandal caused Volkswagen’s reputation—not to mention its stocks—to take a nosedive.
VW suffered another blow when German authorities decided to investigate former CEO Martin Winterkorn and another top official for allegedly failing to inform investors about the potential fallout from the emission cheating scandal. According to a complaint filed by a financial watchdog, the failure of VW officials to inform its shareholders on time about the cheating scandal which caused VW share prices to tumble. According to reports, some 11 million diesel engines worldwide had been fitted with the cheat device.
Investors are raring for a showdown at the upcoming annual shareholders’ meeting, and several of them are contemplating a class action suit especially since they are unhappy with the drop in their annual dividends from €4.86 to €0.17 per share—while members of the board are still likely to get hefty bonuses.
Volkswagen has allocated some $18 billion for the cheating scandal, with the money to be spent on the cost of vehicle refits plus a still undetermined amount as settlement with US authorities fro violating anti-pollution laws. That amount does not even cover the costs of litigation for cases filed in both Germany and the US—and from the way things look, the prospects are bleak because the head of Volkswagen’s US legal team was removed.
Meantime, a lot of VW customers are going to other brands, with many complaining that the value of their cars have been diminished because of the scandal. Complaints are also mounting because many customers can no longer wait for the refit. Adding to the aggravation is the rather slow pace of the internal investigation since VW has yet to actually pinpoint who was really the bright guy who thought up the scam—aside of course from the former CEO who has been accused of deliberately withholding the information to manipulate the market.
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