MarketLine Blog

Volkswagen scandal refuses to go away

The VW emissions scandal shows little sign of slowing – affected consumers must be compensated whatever the cost if the scandal is to be finally concluded. Volkswagen owners in the US received $20,000 per case in compensation; European owners received a mere software update. However, this could be about to change after courts in Germany ruled a pilot case filed against the company by investors could go ahead. Efforts are underway to circumvent European Union laws and bring about similar cases in other European countries too. It follows a raft of investigations around the world. Having already paid out the largest compensation package by a car manufacturer in US history, Volkswagen has now paid out a further $1.2bn to its US dealerships. This does not end the matter: US courts are presently negotiating criminal charges and three states have filed lawsuits of their own, alleging a deliberate cover-up.

Now investors have filed a case in Germany which could cost the company €4bn and other lawsuits in European countries could soon follow. But the scandal continues to expand. South Korean authorities have banned the sale of new and used VW cars; an executive arrested on charges of submitting manipulated data. Furthermore, the Australian government has now lodged lawsuits, dragging VW ever onwards. VW must repair public confidence by offering compensation packages to those who purchased cars fitted with tainted software and making an overt effort to abide by regulations Failure to do so will serve to cement public anger, fomenting long-term reputational damage to the German manufacturer. The only means to bring the scandal to an end is to provide compensation to affected customers irrespective of whether they are legally obliged to do so. The financial damage to the company will be extensive but it will bring the seemingly endless stream of adverse headlines to an end.

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