Earlier this year it was revealed that Volkswagen had been deliberately cheating emissions tests by installing software known as the “defeat device” into a selection of its vehicle models. With news outlets around the world picking up the story, VW has suffered severe damage to its reputation around the world.

So what are the consequences for one of the world’s biggest car manufacturers so far?

  • The EPA has the power to charge any company who doesn’t adhere to their standards $37,500 per car. For VW this could amount to a $18bn fine.
  • From January 2016 VW will begin recalling cars that were fitted with the ‘defeat device’ – almost 500,000 are expected to be recalled in America alone, costing the company £4.7bn.
  • Car sales at its core VW brand fell 5.3 per cent in October to 490,000 vehicles, although this has been partly blamed on the economic downturns in Brazil and Russia.
  • Further casualties will include all non-core spending, and it is likely that sponsorships, motorsport and even niche new model programmes will be cancelled or postponed.
  • VW’s chief executive Martin Winterkorn resigned and was replaced by Matthias Muller…who is under pressure from shareholders to resign just two months into his role.

With a new chief executive at the helm, Volkswagen are determined to turn over a new leaf and at least try and keep the public on side. Dr Herbert Diess, CEO of the VW car division told the press…

We are working at full speed on a technical solution that we will present to partners, to our customers and to the public as swiftly as possible. Our aim is to inform our customers as quickly as possible, so that their vehicles comply fully with regulations. I assure you that Volkswagen will do everything humanly possible to win back the trust of our customers, the dealerships and the public.’

It’s a PR disaster, and only time will tell whether or not the German giants of the automobile world will ever fully recover. The new CEO Matthias Mueller was open and honest about the perilous situation the company finds itself in, telling 20,000 staff at their German HQ that ‘It is not possible to quantify the commercial and financial implications at present. Anything that is not absolutely necessary will be cancelled or postponed… To be perfectly frank: this will not be a painless process.

For more information on the details of the scandal, and the effects it has caused to VW’s reputation, the environment and the auto industry take a look at the infographic below…

VW Emissions Scandal Explained
Provided by Jennings Motor Group

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