German car giant Volkswagen faces a huge lawsuit from the US Justice Department following its admission that it illegally fitted emission test defeating devices to thousands of its cars in recent years. The manufacturer’s September 2015 admission has now been followed by the lawsuit, which was issued on January 4th.
In a staggering blow for the motor trade, Volkswagen confessed to fitting devices to more than half a million of its cars in a concerted effort to fool emissions tests into showing much lower levels of nitrogen dioxide emitted from its diesel engines than was actually the case; more worryingly, the genuine emissions levels exceed Environmental Protection Agency (EPA) limits, significantly polluting the atmosphere.
The devices work by actively spotting when the car is set at test conditions and alter the way the engine performs to distort emissions readings. It’s important to note that the device is specifically designed to alter nitrogen dioxide levels and there’s no suggestion that the company has changed reported carbon dioxide emissions levels at the same time.
The manufacturer will now be forced to recall millions of its cars across the globe, in a move that is expected to cost upwards of 4 billion pounds; with the other associated costs from the lawsuit, together with a loss of consumer confidence and falling sales, the cost to the company will almost certainly be significantly higher in the long term.
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Volkswagen is a significant player in the market for both new and used cars, with its Polo and Golf models in particular being huge sellers; time will tell if the company is able to regain trust among its customers and in the wider marketplace. The company is in the process of a widespread internal review of the scandal, and has promised to investigate every possible level of involvement among its employees. The potential impact on the industry is significant, although any major effect on vehicle prices or insurance policy rates has yet to be seen. With a huge recall in vehicles, it’s expected that there will be a fall in the numbers of VW cars and vans at garages and on trade plates.
In addition to the US Department’s lawsuit, the company has also been hit with a large number of individual and class-action suits from owners of affected vehicles, and may well find itself tied up in legal action for a considerable time to come. Criminal charges have also been made following the failure of the company to meet emissions standards and cause widespread air pollution.