Had Volkswagen invested in technology and research it could have avoided the decision to trick US emissions regulators into believing that it’s cars were polluting less than what was claimed. VW went down the easy route and cheated in order to save money but the decision to do so has backfired as it will end up costing more than it will ever save.
It doesn’t help when you decide to cheat in America, one of the most finely tuned one of the most litigious societies… in the world.
The deal being brokered with US regulatory authorities will see VW repair or buy back the affected diesel cars and in addition pay owners compensation.
US emissions regulators discovered VW had used software to camouflage results during emissions testing.
When VW were caught out they went on to admit that around 11 million cars were affected worldwide, specifically cars sold with 2.0-litre turbodiesel engines.
In the US just under 500k vehicles were effected, and it is believed that VW will compensate owners to the tune of $10,000 each.
Owners will be have until 2018 to decide whether to sell back their cars or go for a repair.
Researchers estimate that some of the affected vehicles could have been pumping out pollutants over 40 times the legal limit.
VW has deep pockets, it’s total assets are valued at around $425bn and it makes an operating profit of around $13bn per year.
But there might be more pain on the the way, US regulators could further punish VW for violating the country’s Clean Air Act and that figure could top an additional $20bn.
All of this means VW will make a loss for this financial year and it will also mean the company will have to sell off corporate assets and dig deep into it’s pockets to cover the losses.
To further compound the matter VW also expect group wide sales to fall by 5 percent for this financial year ending.
Meanwhile German prosecutors are investigating VW’s entire former management board.
Former VW CEO, Martin Winterkorn, is under the spotlight and could be prosecuted for effectiviley manipulating the markets to VW’s favour.