VW Was On Top, Successful, Battling For World Number One And Then Came Dieselgate...

Cash Isn’t The Only Way That Volkswagen Has Paid For Dieselgate

Looking at the ever-rising costs of Dieselgate, you have to wonder, why Volkswagen did it to itself? It was at the top of its game, battling tooth-and-nail with Toyota for World Number One and suddenly the wheels came off when the world found out, VW was a cheat.

When you stop to think about it, Dieselgate has been an expensive proposition to Volkswagen. It seems to be an expense that, in hindsight, the automaker never should have had to pay. However, the hubris of a few mid-level engineers and later senior managers meant that from the start in 2006, it would end up the way it has.

If the automaker had had the foresight to admit that an engine it was developing in 2006 could not meet the emissions goals for 2008, when it was rolled out, it would have saved billions.

Here’s a list of the costs that, to date, Dieselgate has cost VW:

  • $10.03 billion to buy back and compensate the owners of 475,000 2.0-liter turbodiesel four-cylinder Volkswagen models. Wherever you found the initials TDI from 2006 to 2015, owners of those vehicles will be receiving the value of their vehicles on September 30, 2015, as well as a compensation payment ranging from $5,100 to $10,100.
  • $2 billion to fund improvements and additions to zero emissions infrastructure across the country. Already, many firms are jostling for a cut of the money and are even trying to cut VW out of the picture, entirely. The only thing they want VW doing is signing their checks. The Environmental Protection Agency (EPA) has said “wait a minute, VW can earn a bit off their investments if they follow the rules. You can’t keep them from it as they do deserve a return on investment.” The competition has tried to make this a non-starter, and when they failed with lobbying regulators and filing court documents, they lined up their cheerleaders in Congress who are mimicking their language and perhaps their thinking as the lawmakers want to skew the playing field from VW and into their supporters’ arenas.
  • $2.7 billion to mitigate the damage caused by the years that VW’s cheating diesels spewed extra pollutants into the atmosphere. The funds are to replace items like aging diesel bus fleets. This figure was just upped by $200 million as part of the 3.0-liter V-6 settlement that is still is awaiting final approval.
  • $1.2 billion to compensate dealers for things like unsold inventory; dealership improvements, and other items.
  • $400 million to the states in settling a suit brought by 44 state attorneys general. The money is for mitigation, in addition to other payments.
  • $800 million to California, where the bulk of the 2.0-liter engines have been sold, in mitigation payments.
  • Unknown amount to dealers who cannot sell any turbodiesels still in their inventories.
  • $1.6 billion to Canada to settle the Dieselgate scandal there.
  • $1 billion to pay costs relating to the 3.0-liter V-6 turbodiesel engine portion of Dieselgate.
  • Up to $46 billion if the Justice Department wins its civil suit on racketeering charges relating to the entire Dieselgate scandal. It is part of the agency’s criminal investigation and would likely settle the matter if Justice agrees.
  • Still up in the air are fines and penalties from the Federal Trade Commission (FTC) which has charged the automaker with false advertising.

All of these penalties are in addition to more fleeting things that can’t be gauged. For example, what is the cost of a company’s lost reputation? And, what’s the cost to a firm that has prided itself on its racing efforts as it watches successful racing teams shuttered to save money so it can pay other bills?

Another story tomorrow will explore how VW ended up where it is and how it got there.

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Comments

VW/Audi/Porsche were comfortable cheating instead of properly solving engineering problems in the design of a modern car. New cheats are still being uncovered. Now that owner compensation has mostly been negotiated, at least in North America, it is time for criminal charges against VW Group executives. Fines are not sufficient deterrent.
•"Still up in the area are fines and penalties.......". In the_air_. ".... as it watches successful racing teams shuddered to save money....". Shuddered? Does this guy ever proofread what he's written?
Guess you didn't like my pun, really??? -- all fixed.
I have to agree that there is criminal responsibility and it is time for someone to pay the piper. Since this has been known by various mid- and upper-level managers and engineers as well as executives, I think that due diligence has to be observed, as well as due process, and things should move ahead. The Justice Department still has an ongoing criminal investigation that I believe VW would like wrapped up as quickly as possible so there will likely be an attempt at settlement there. That said, there still should be actions taken above and beyond fines, so I do agree with you here. There are also ongoing criminal investigations in Germany, Italy and I believe France that have yet to yield any results and there has been at least one conviction in South Korea. One of the more egregious points was VW's attempt at silencing a whistleblower last year, though some may not think it important or germane. He was the only IT person I know of who called out VW for improper deletions.