The fallout from the Volkswagen scandal has moved to the repair phase as Europe’s largest auto manufacturer begins the process of modifying 8.5 million diesel engines known to be intentionally defeating environmental emissions controls.
Volkswagen was rocked earlier this year as evidence surfaced that the company was using software and physical defeats in millions of light duty diesel vehicles. The defeats were used to detect situations where the vehicle could be undergoing emissions testing and ensured that the engine would perform within acceptable parameters.
Outside of these testing situations, however, independent studies showed that diesel-powered Volkswagens were polluting at levels up to 40 times those allowed by federal regulators.
The consequences for the company came swiftly, and they were severe. Governments around the world immediately levied steep fines and plaintiffs lined up to sue for a misrepresentation of epic proportions.
For its part, Volkswagen asserts that they have the situation under control. When news of the scandal first broke, the company immediately set aside some 6.7 billion euros to deal with the fallout. That fallout has begun in earnest as millions of cars now wait for software upgrades and other modifications to help bring their emissions under control.
Volkswagens with a 1.2- or 2.0-liter engine should only require a software modification. Those powered by a 1.6-liter engine require the software modification plus the installation of a piece of mesh used to help control engine airflow.
The European stock market has reacted favorably to Volkswagen’s moves, adding some 1.1 percent back to the company’s coffers on the news of the coming software modifications. The road ahead is still a long one, however, as the scandal initially removed some $12 billion from its stock value and sales numbers continue to decline. Also yet to be addressed is news from Bloomberg that VW may have accepted bank loans specifically earmarked for the development of cleaner burning engines at the same time they were allegedly intentionally defeating US and European emissions controls.
This is course, a continuously evolving situation and Lopez McHugh is following the developments in the Volkswagen case both domestically and internationally.
