The Volkswagen Scandal
Most of us have heard about about the scandal involving emission controls on VW diesel cars but I doubt that many realize how serious it is. The clean diesel engine was supposed to be the best of all worlds, good mileage, great performance and low pollution. Unfortunately the engineers and Volkswagen could not pull all three of them off. So what did they do? They cheated adding complex software that could turn the emission controls on when it was in a test facility and then turn it back off when the car was again on the road. They sold nearly 500,000 of these cars in the US and 11 million worldwide. We also learned this week that at least some in the Germany Government knew about this 2 years ago.
While it’s true that other automakers have had to recall faulty cars this is different – Volkswagen made their cars faulty on purpose. Volkswagen is certainly in trouble, they will billions of dollars in fines and have a massive recall. Yes they can fix the emission problems by when they do the car will no longer perform as advertised. Some wonder if Volkswagen can even survive this. But it’s not just Volkswagen but the entire German auto industry has a bad name. The result could be that the entire Germany economy will be hurt and as could the government in Berlin. As the German economy goes so does the rest of the economies in Eurozone.
Some further reading:
Volkswagen Scandal Becomes “Investor’s Nightmare” As German Government Dragged In