Volkswagen today confirmed an agreement in principle with the US Department of Justice (Environmental Division), the Environment Protection Agency (EPA), and the California Air Resources Board (CARB), with the full involvement of the Federal Trade Commission (FTC) with regard to what it calls “the diesel issue”.
Most reasonable people would likely regard deliberate misrepresentation of the poisonous gas emissions output of 11 million cars sold around the world as rather more than just an “issue”. No doubt the details of the settlement reached in the USA to satisfy the DoJ, EPA and FTC will confirm this when (or if) they are made public. Any settlement will likely be measured in the billions of dollars and outstrip all previous fines for corporate malpractice.
VW US Class Action Lawsuit settlement
The San Francisco district judge overseeing the complex class action lawsuit has gagged all parties regarding the proposed terms of the settlement terms, but auto industry valuation leaders have already estimated the likely cost of buy-backs and/or compensation at something approaching $7 billion in the US, where just half a million from the 11 million cars affected were sold. Other corporate pundits have put possible federal penalties for VW in the US at somewere around $20 billion. Get your head around that one.
Other sources suggest that a proportion of owners will not avail themselves of the Volkswagen offers, with commentators noting that many US VW diesel owners “like their cars and like how they drive – they don’t want to give them up or get them fixed”. Perhaps a mooted $5k cheque per car will bring them to the dealerships.
Zero VW Emissions Compensation in UK and Europe
UK and European owners will not be so fortunate, as VW continues to insist that its customers outside of America have not been disadvantaged by choosing to buy a Volkswagen. This creates a brilliant opportunity for debate, where Volkswagen will surely have its nose rubbed in rather pungent defeat, unless the lobbyists currently pounding EU corridors of power have pulled some almighty strings.
German Economy continues to wobble
Meanwhile, today’s Times reports that German Manufacturing Purchasing Managers’ Index (PMI) has dropped to its lowest since July 2015, which the paper considers to be a strong indication of unwinding eurozone growth. The continued decline in PMI will have considerable political and economic repercussions in a Germany that remains wrapt with right-wing tension.
Shares in Germany’s car manufacturers also fell sharply today, as Daimler (Benz) declared a 32% fall in first-quarter profits and admitted that, following a request from the US Justive Department, it was also conducting an investigation into its emissions testing processes. This follows Mitsubishi’s recent admission that it falsified Japanese emissions test results by overinflating the tyres of cars being tested. I still think we are at the tip of the iceberg – who will be next?