We break down the Volkswagen Emissions Scandal and display pertinent numbers relevant to the investigation into the use of bypass software to cheat emissions testing and promote “clean diesel.”
he engines were set to be a revolutionary breakthrough, used not just for Volkswagen models, but also for the company’s premium brand Audi, and less costly offshoots Skoda and Seat, along with some light commercial vehicles. Although specifics remain sketchy, it appears that management from the engineering team instructed the use of the software, under pressure to market the “clean diesel” breakthrough. The internal audit discovered that engineers realized that the vehicles would not, at the very least, meet U.S. diesel emissions standards, which are more stringent than in Europe.
Although the UAW is currently regrouping its efforts, there is a real possibility that FCA employees will strike, the first in decades. Following Thursday’s announcement, union leaders met with 300 UAW shop representatives throughout the night, yielding discussions, but no tangible solution to the impasse. Williams hinted that a return to the bargaining table in the near future could be possible, saying in a statement that the union will “gather the issues; notify FCA that further discussions are needed.” Williams added, “We don’t consider this a setback; we consider the membership vote a part of the process we respect.”
The companies include: Volkswagen, Tesla, Daimler’s Mercedes Benz division, Jaguar-Land Rover, Suzuki, Volvo Trucks, and Spartan Motors. Depending on the regulator’s findings, the manufacturers could add to the 11 companies and over 19.2 million vehicles within the U.S. implicated in the recall. Specifically, the NHTSA is asking the automakers whether or not their airbags contain ammonium nitrate, the propellant that can “potentially lead to overaggressive combustion or potentially cause the inflator to rupture,” spraying shrapnel into the driver’s cabin; which has been attributed to at least eight deaths and over 100 injuries.
Clarence Ditlow, executive director for the Center for Auto Safety said,”The damage to Volkswagen is going to last for years. This was so clearly a deliberate act by executives at Volkswagen that there needs to be criminal penalties.”
Tangible damage has already begun on a grand scale for the company since the announcement, as its stock has plunged over 35 percent by midday trading on Tuesday, including closing down 18 percent on Monday, already dropping the company’s value by nearly $17 billion even before Tuesday’s announcement. The scandal and costs associated with EPA-ordered recall will likely cost the company at least that much factoring in federal penalties from the U.S. as well as in other nations. In addition, the amount of civil liability and class-action lawsuits could also range in the billions.
The company faces a potential $37,500 fine by the EPA for each Clean Air Act violation. That could lead to the automaker facing as much as $18 billion in federal penalties in total. To put that in comparison, General Motors just agreed to a $900 million federal penalty on Thursday after a Justice Department criminal investigation over its ignition-switch defect that led to at least 124 deaths, and Toyota agreed to a $1.2 billion penalty last year after several deaths were attributed to an acceleration defect.
A recent IIHS study estimates that injury claims could be reduced by as much as 35 percent by implementing the technology. A comparative study of Volvo insurance claims found that property damage claims involving vehicles with automatic-braking systems were 15 percent lower than vehicles without the systems. IIHS president Adam Lund said about automatic-braking systems, “Most crashes involve driver error. This technology can compensate for the mistakes every driver makes because the systems are always on alert.”
In an industry that set a record for recalls in 2014, and with over 34.5 million vehicles recalled by the end of July, 2015, Jackson believes that dealers should take a more active role in protecting consumers. The CEO said, “If every time a vehicle, new or used, moves through the franchised automotive retail system, every recall is completed, then the completion rate on recalls in total, both how fast they get done and the percentage that get done, will increase significantly.”
The tests come as several critics dispute the validity of eight road tests that the Federal Highway Administration (FHWA) claims that the ET-Plus passed in March. The ET-Plus guardrail is designed to act as a shock absorber when a vehicle collides with it, but many believe that the guardrail can buckle and splinter instead, spearing the vehicle and possibly drivers with jagged pieces of metal piercing through the door or window. Currently, there are over 200,000 ET-Plus guardrails installed throughout the U.S. highway system.