In the wake of the Volkswagen scandal involving various cheats to make sure diesel vehicles passed emissions tests, one question remains. Did Volkswagen know that there was cheating involved even before the car manufacture began?
Last week, the automotive world was rocked by the admission that Volkswagen used special software to make sure their diesel vehicles passed the U.S. emissions tests. The deception was first unearthed by the EPA and later confirmed by the company. The vehicles affected by this go all the way back to 2008. Volkswagen promises it is investigating the matter. Those internal investigations may prove to reveal disturbing truths, however. German media has already reported that, far from being unaware of the problem, Volkswagen was specifically warned in 2007 to not use the software by a parts supplier. The parts supplier was reassured by Volkswagen itself that the "defeat devices" were only for testing purposes. And that wasn't even the only time that they were warned: in 2011 a Volkswagen technician related concerns about the cheating to authorities, but it was not followed up on. Those two incidents seem to suggest that the scandal isn't just a lack of oversight on the part of the company, but is in fact intentional deception. In 2013, a European Commission study indicated that manufacturers were using loopholes, but currently Volkswagen is the only one directly accused of fraud.
By using the software to cheat on the tests, Volkswagen may have caused as much as one million tons of extra air pollution per year. The company has set aside 6.5 billion euros to pay for litigation issues, but that's not likely to be enough. Ten countries have already started their own independent investigations, and the town of Wolfsburg, which has all but made its living from the Volkswagen plant there, is now fearing for its future.
Volkswagen is currently the largest car manufacturer in the world. In Germany, over 800 thousand people are directly employed by Volkswagen, and millions more jobs are linked to the company. Germans have marked it the number one symbol of their country. The Volkswagen Bug remains the most produced car of all time. Especially for the people of Wolfsburg, if Volkswagen production slows, there could be an economic disaster in Germany almost as strong as the one in Greece.
Of course, the Germans aren't the only ones who are facing potential financial trouble over the scandal. Volkswagen dealers in the U.S. have already seen a slowing of sales, although diesel vehicles are only a very small percentage of those sold by U.S. dealers. Switzerland has already banned all affected vehicles including those by Audi, Seat, and Skoda. Diesel cars make up almost half of the European market sales.
German regulators aren't just sitting on the issue and waiting for the company to respond. In fact, they're demanding that Volkswagen produce an acceptable solution by October 7. Volkswagen is already promising a free fix to all affected vehicles, but it's clear Germany wants more than that.
Matthias Mueller, the new head of Volkswagen after the resignation of Martin Winterkorn, is facing an uphill battle to save the company - both its reputation and its financial state. Volkswagen stock has dropped by almost 30 percent in the past week, and there's indications the stock will drop even further.
Chrysler and Mitsubishi are known to have ordered and used Volkswagen's diesel engines, but it's not currently known whether those had the software that allowed them to cheat the tests.
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