Good to Know:-
In September 2015, Volkswagen AG
shocked the automotive world when it admitted to allegations made by the U.S. Environmental Protection Agency (EPA)
that it had manipulated its software to cheat on emission tests. Worldwide,
more than 11 million diesel-powered cars are affected, including Volkswagen,
Audi and Porsche brands. The scandal is especially shocking because Volkswagen,
which recently surpassed Toyota as the world's leading car maker, had
historically been one of the more trusted brands in the automobile industry.
What
Will Happen to U.S. VW Owners?
Volkswagen has already announced it
plans to recall all affected cars in the United States in 2016. Although no
date has been announced, company officials have said that all cars should be
fixed by the end of 2016. Most U.S. cars will require a software update along
with some hardware modifications. What that ultimately means for the nearly
500,000 Volkswagen car owners in the United States is not yet certain. The
suggested fix raises questions over the effect it will have on car performance,
with the possibility of lowered fuel mileage and power. Volkswagen will have to
face that issue if U.S. car owners revolt over reduced performance.
While U.S. car owners are waiting
for information on the recall, Volkswagen is attempting to rebuild goodwill by
paying out $1,000 in cash and dealership credits.
What
Is Happening to Volkswagen's Senior Management?
Without acknowledging any
involvement in the scandal, VW CEO Martin Winterkorn stepped down "for the
good of the company." He was replaced by Matthias Mller, who had headed
up the Porsche division since 2010. However, questions are now being raised over
the possibility that Mller had knowledge of the defeat devices that were used
in some of the Porsche models.
What
Will Happen to Volkswagen New Car Sales in the United States?
As of January 2015, no 2015 or 2016
Volkswagen diesel models may be sold in the United States. Although it did roll
out its latest Passat model last month, it cannot be sold until the company
fixes the emission issue to the complete satisfaction of the EPA.
How
Big Is the Financial Hit for Volkswagen?
The company had already reported a
$1.83 billion loss for third-quarter 2015 when it was revealed that the EPA
could penalize the company with fines as high as $18 billion ($37,500 per car).
Volkswagen has set aside just over $7 billion to cover potential fines and the
costs for recalls. Based on the final outcome of its negotiations with the U.S.
government, Volkswagen may be required to buy back as many as 100,000 cars. Most
analysts believe that Volkswagen will be able to absorb the cost of the scandal
if it does not surpass $8 billion.