Earlier this month, the United States Department of Justice officially found Volkswagen liable for criminal wrongdoing. The decision makes it all but certain that the auto giant will face criminal and civil suits for the fraud it perpetrated against the U.S. and other countries when it intentionally defeated emissions control systems in 11 million diesel-powered vehicles.
As a result of the finding, the Justice Department and VW are negotiating the terms of a settlement.
The finding stems from revelations that Volkswagen used software and various pieces of hardware to intentionally defeat emissions systems in several of its diesel-powered vehicle lines. Under testing circumstances, the emissions systems behaved optimally – keeping the vehicle’s emissions at or below federally regulated levels. However, once the test was complete, researchers discovered that VWs were polluting at levels up to 40 times those allowed.
The deception and fraud has been disastrous for the company, as billions of dollars have evaporated from its value, billions more will be spent in settlements, and consumer confidence in its cars falls through the floor.
Regulators and consumers aren’t the only ones seeking compensation from the company. Last week, VW settled with 650 dealers that brought suit against it for revenue lost as a result of the scandal. Franchisees across the country saw huge losses as VW’s once ultra-loyal consumer base abandoned the company and potential new purchasers stayed away from lots and showrooms.
Records continue to be set as the payouts continue. June saw a $14.7 billion penalty agreement reached with the Justice Department – the largest made by an automaker in the history of the US auto industry. Other settlements and payouts have ranged from tens to hundreds of millions of dollars.
The fines and settlements against Volkswagen dwarf the previous record of $1.2 billion paid by Toyota in response to the unintended acceleration lawsuits that ripped through the company. Over the course of those proceedings, it was discovered that Toyota executives knew about and failed to warn customers of the defect.
Volkswagen continues to try to keep the focus on its efforts to rehabilitate its image. Executives and spokespeople continually re-state the company’s commitment to earning back the trust of consumers, regulators, dealers, and everyone else that has put so much faith in a company that perpetrated one of the greatest frauds in American consumer history. But from company loyalists to environmentalists, the damage to Volkswagen’s once stellar reputation may just be too great.
