One year on, can Volkswagen leave ‘dieselgate’ behind?
The German company has sought to make amends with mass recalls and a fresh focus on building cleaner cars, but a mountain of legal complaints and ever-louder demands for compensation have made it difficult to turn the corner.
Just on Friday, two legal claims landed on Volkswagen’s doorstep with Blackrock — the world’s largest investment manager — saying it would join a legal action accusing the car giant of misleading shareholders, echoed by the German federal state of Hesse.
The scandal “has had huge effects on Volkswagen and the whole sector”, said industry expert Stefan Bratzel of Germany’s Center for Automotive Management.
VW built itself over decades into Europe’s car champion and now sells vehicles under 12 separate brands — from Seat, Skoda and Volkswagen to luxury brands Audi and Porsche.
The firm rakes in 200 billion euros ($225 billion) in sales each year and employs 600,000 people globally.
But the Wolfsburg-based group was rocked to its core when US regulators on September 18, 2015, accused it of deliberately skewing emissions data.
VW then publicly admitted it had installed so-called “defeat devices” in 11 million diesel-powered vehicles around the world.
The software is able to detect when cars are undergoing regulatory tests and lowers their emissions accordingly, giving them the appearance of being less polluting than they really are.
In response to the revelations, Martin Winterkorn resigned as chief executive while insisting he had known nothing of the scheme, leaving then-Porsche boss Matthias Mueller to take over the whole group.
– Stock market blues –
So far VW has put aside 18 billion euros in legal provisions, which pushed the company last year into its first annual loss in more than 20 years.
When the crisis broke, investors watched in horror as VW stock lost 40 percent of its value in just two days — burning up 30 billion euros of market capitalisation.
One year on, VW remains valued around 20 percent lower than it was before last September.
Beyond stock markets, the scandal triggered no collapse in business for the Volkswagen brand, which on Friday reported that sales fell by just 0.2 percent worldwide in January-August 2016 compared with the same period last year.
That period, though, saw 30,000 fewer cars with the circular VW badge drive off the dealers’ lots in the United States — a drop of 13 percent.
– Miles to go –
“One year after ‘dieselgate’, Volkswagen has maybe gone 50-60 percent of the way, but there’s still a lot to do,” Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen told AFP.
In the United States, the firm was able to reach a deal settling some of the claims, agreeing to pay almost $15 billion in fines and in compensation to some 480,000 car owners.
At home in Germany it faces lawsuits from hundreds of investors claiming at least 4.0 billion euros.
In the suit joined by Blackrock, the plaintiffs accuse VW of failing to disclose the looming scandal to investors in a timely fashion.
And VW still faces other legal claims in the United States as well as lawsuits and probes around the world, including in Australia, South Korea, France and Italy.
Meanwhile, European authorities are stirring in Brussels, animated by the charge that American VW customers are being treated better than EU citizens affected by the scandal.
So far, VW has refused to compensate Europeans or buy back their vehicles. Instead, it plans to retrofit the 8.5 million vehicles concerned to meet emissions standards.
Experts predict the total bill for Volkswagen could reach between 25 and 35 billion euros, leaving the firm once again raiding its piggy bank but not threatening its survival.
– ‘Turning point’ –
Dudenhoeffer suggests that ‘dieselgate’ could in the end be a “boon for Volkswagen”.
New CEO Mueller has adopted a bold strategy, promising dozens of new electric vehicles in coming years as well as pushing into fields like car-sharing services and self-driving cars.
VW’s cheating has also seen regulators step up scrutiny of the whole industry, shining a spotlight on the harmful effects of polluting engines.
The scandal has been a “turning point for diesel”, said Bratzel of Germany’s Center for Automotive Management.
From September 2017, carmakers will submit vehicles for on-road testing as well as laboratory probes, forcing them to invest in more effective anti-pollution systems.
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