The Volkswagen emission cheating scandal- epilog

After years of self-denial, Volkswagen has finally admitted
that it equipped 11 million vehicles with software that was
used to cheat during emission tests. Once this software sensed
that a car was being tested, it would activate specially
prepared equipment that reduced emissions and made the models
pass emissions tests.  During regular driving, this
software would turn down this equipment to improve acceleration
and torque as well as to save on fuel. However, doing this
increased emissions above legal limits.

These special components work by recycling exhaust gases like
nitrogen oxide (NOx) which is harmful to human health. This gas
can cause various respiratory diseases including bronchitis and
emphysema.

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Effects of the emission cheat

According to a research done earlier, the affected models in
the US alone are emitting 10,392 tons to 41,571 tons of harmful
nitrogen oxide into the air annually compared to only 1,039
tons they are supposed to emit had VW complied with federal
pollution standards.

This means the models are emitting around 40 times beyond the
federal standards. Worldwide, all the 11 million affected
models could be emitting between 237,000 tons and 948, 500 tons
of NOx annually.

What’s next?

Last month, the American government reached a deal with the
automaker who agreed to compensate around 500,000 customers
with the 2.0 L, diesel models. Exact details are not yet out
but according to reports, the automaker will either buy back
the models or fix them to meet emissions standards. In
addition, the automaker will provide substantial compensation
to owners of the cars.

However, we understand that the agreement does not apply to
90,000 owners of models with the 3.0L diesel engine. However,
these might still get recourse as there are other lawsuits by
owners and dealers all over the world. The agreement might,
however, give an indication to what the automaker might do with
affected buyers in Europe and the rest of the world. The deal
with the American government is set to be finalized in June and
analysts observe that the deal will cost the company around $10
billion.

Norway’s pension fund which is the largest sovereign fund in
the world has said it is planning to join a class action
lawsuit which has been brought about by private investors in
Germany. These investors are looking to recover their losses
because of the scandal. Prior to the scandal, the fund had
invested around $ 1.2 billion in the German company making it
the 4th largest stakeholder in the automaker.

Impact on the automaker

Ever since the news of the violation broke out in September
last year the, company’s stock value has declined by over 40%.
The scandal has even affected the automaker’s objective of
becoming the largest automaker by 2018.

According to reports, the automaker is not even paying much
attention to the US market until the issue is resolved. Prior
to the out of court agreement with the United States
government, the US department of Justice had already sued the
automaker on behalf of EPA. Following the cases of Toyota and
GM scandals, Volkswagen could have been fined up to $37,500 for
every car totaling to around $18 billion. VW seems to be well
prepared to handle the situation as the company has already set
aside $ 18.2 billion to cover costs related to fines, recalls
and regal fines.

However, analysts argue that the figure could be inadequate
with the US government deal set to cost around $ 10 billion
leaving the automaker with only $8 billion to cover around $10
million cars worldwide.

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Blow to the diesel market

The Volkswagen diesel scandal has left many people with a bad
taste of diesel powered automobiles. Before the scandal
emerged, diesel vehicles were experiencing a sharp decline in
demand.

The scandal has now made the situation even worse for diesel
cars. In the US, diesel cars are now accounting for only 1% of
all new car sales and the demand is projected to decline over
the coming months. The future of diesel vehicles has also been
cast into doubt after scientific studies revealed that diesel
vehicles are not all that friendly to the environment as
earlier believed. In fact, some cities are moving to limit the
number of diesel cars on the streets.

Europe is still more receptive to diesel powered models but a
revelation that almost all diesel-powered vehicles are flouting
emission standards is also set to affect diesel sales over
there.  In addition, there have been calls to revise
European testing regulations as many automobile analysts argue
that they are a bit relaxed compared to those of the U.S.A.

Cars with scandal affected engines

Cars that as a drive unit use 2.0 TDI and 3.0 TDI engines found
themselves under attack of strict regulations on environment
protection. We give you a list of some of the cars that drive
these motors.

2014–2016 Audi A6 3.0 V-6 TDI

2014–2016 Audi A7 3.0 V-6 TDI

2014–2016 Audi A8 3.0 V-6 TDI

2014–2016 Audi Q5 3.0 V-6 TDI

2009–2015 Audi Q7 3.0 V-6 TDI

2010–2015 Audi A3 2.0 TDI

2013–2016 Porsche Cayenne Diesel 3.0 V-6

2009–2015 Volkswagen Jetta 2.0 TDI

2009–2016 Volkswagen Touareg 3.0 V-6 TDI

2010–2015 Volkswagen Golf 2.0 TDI

2012–2015 Volkswagen Beetle 2.0 TDI

2012–2015 Volkswagen Passat 2.0 TDI

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