By on March 8, 2016

TDI Clean Diesel

There’s never a dull moment at Volkswagen, and today the automaker finds itself fighting battles on so many fronts they’ll soon be wishing for General Eisenhower’s plotting table.

As the company steels itself for further bad terrible financial news, German prosecutors have widened their probe into the diesel emissions scandal and targeted 17 Volkswagen employees.

The new headcount is a big jump from the earlier six suspects, and authorities have said they’re not done looking. So far, none hail from Volkswagen’s management board, but Klaus Ziehe, a spokesman for the state’s attorney’s office, has said that management involvement has not been ruled out.

On the other side of the Maginot Line, French authorities announced they have opened a formal fraud investigation into the emissions scandal.

Just in the past week, Volkswagen had to admit to U.S. regulators that it will miss a District Court-issued deadline for an emissions fix for that country’s fleet of affected vehicles. At the same time, questions are being raised about the amount of knowledge upper management had of the diesel deception prior to last September’s EPA notice of violation.

The company is now gritting its teeth as it awaits its 2015 earnings report, a very unhappy document that was delayed by the unfolding scandal and is expected to come out on April 28.

Volkswagen Group CEO Matthias Müller has said the financial pain to the company will be “substantial and painful,” especially considering the fines that will eventually have to be paid.

Future fines and possible lawsuit payouts weren’t factored into the $7.49 billion the automaker set aside last year to finance the recall of about 11 million affected vehicles, meaning it might have to set aside about $17 billion more.

With a stop order in place on the sale of 2015 and 2016 diesel vehicles and plummeting U.S. sales as a result of the scandal, the financial storm has just begun for Volkswagen, and that’s making workers nervous.

The company’s worker union has said it supports Volkswagen’s efforts to dig its way out of its financial problem via efficiencies and restructuring, but not if it means cutbacks to staff.

Müller and Volkswagen brand chief Herbert Diess met with workers and their labor boss Bernd Osterloh in Wolfsburg, Germany on March 8 in an attempt to reach an understanding about the situation.

Osterloh has previously called the company’s plan to improve productivity “unrealistic,” and by all accounts remains at loggerheads with management.

And that was Tuesday, March 8 at Volkswagen.

[Sources: Automotive News, New York TimesBloomberg]

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22 Comments on “It’s a Day That Ends With “Y”, Meaning More Bad News for Volkswagen...”


  • avatar
    mikedt

    It would be nice if instead of fining the company millions/billions and potentially putting the jobs of thousands of average factory workers at risk, the collective governments could just jail a few of the high ranking guys that signed off on this crap. Nothing would put the fear of god into execs like a few of them heading off to blue-collar prison.

    • 0 avatar
      SCE to AUX

      Executives are expendable. VW will learn more by watching all of its cash reserves disappear, along with much of its market share.

      • 0 avatar
        bunkie

        If there’s a potential profit, there’s always more money available and the cycle continues. MikeDt is right: we have to jail the people who sign off on these decisions.

        I work in banking and the ability of the banks to handle fines of $10 billion is commonplace. Of course, the rank-and-file workers are the ones who get screwed as the inevitable “we had a bad year, we’re restructuring” message comes down and tens of thousands of layoffs ensue. It’s fundamentally restructuring the relationship between the banks and workers: in IT (where I work), it means that there are very few permanent employees, almost everyone is a contractor so that layoffs no longer involve packages. Contractors find it almost impossible to save money in 401(k) plans, have no sick days and any time off from work is money not received. Just another example of the Great American Swindle.

        The solution is to, as a comedian so colorfully put it, send the responsible execs to ***-pounding prison. It saves jobs and, more than anything, puts real risk into making law-breaking decisions.

        • 0 avatar

          I’m forever amazed that there are never any “admissions of liability” when the big fines are paid out. You have to admit liability if you shoplift, but launder billions in drug money ? Bet against your own clients ? Make loans, dishonest from the inception, a fraud upon the Bank, or foreclose on loans with robo-signed documents, a fraud upon the Court ? No problem, sign here, no admission of liability. (wouldn’t want to make any private lawsuits for your wrongdoing easy as a matter of law).

          I used to think that Government was a counterweight to business, or at least a referee. Now, I know it is a wholly owned subsidiary.

          I like the term “Great American Swindle”…because that is what it is.

      • 0 avatar
        TrailerTrash

        mikedt is right.
        Yes…a finacial corp penalty is indeed needed. But if the real criminals never get penalized, the crimes keep happening.

        You gotta pay for doin the crime.
        Ditto the financial crisis and housing crisis.
        The real bums never get spanked.

        Anybody lose their job at the IRS?
        Anybody lose their job at the Vet Admin?
        Anybody lose their job at the EPA after their recent ecological disasters?

        Governments LOVE the fines cause that’s their cut. The “people” take the hit everywhere else.
        It’s all good for lawyers and the government.

    • 0 avatar
      redliner

      Why can’t we do both. Jail AND massive fines. That’s Bi-winning.

  • avatar
    John

    One thing about the Japanese – they do have coverups, but when one is exposed, the top management accepts responsibility.

  • avatar
    Hydromatic

    It’ll be interesting to see if this plays out with the VW brand leaving the US or becoming a highly marginalized and highly niche player like Suzuki was before it finally left (and Mitsubishi currently is).

    • 0 avatar
      moorewr

      They’ll stick around. They are, after all, still busy selling cars here.

      Whether diesels stick around is another question.

      • 0 avatar

        Yah, I think diesel is toast. BMW and Mercedes will sell whatever is currently certified until there is a new production, and I’m guessing that they won’t bother to try to certify the new cars…..

        Shame too, I didn’t dislike my TDi as a car (as opposed to as a science experiment I paid for), and fuel prices will go back up, eventually.

    • 0 avatar
      MrGrieves

      I have to wonder if maybe it’s already begun on a dealer franchisee level. Driving by the local VW dealer each morning, I notice that it’s suddenly become a “premium” used car lot with the exception of a couple of Passats and Jettas. How can any business support a floorplan when your product is either unsellable or totally irrelevant?

  • avatar
    seth1065

    I can deal w VW trying to cheat the system, they more than likely felt they would not get caught, or if they did a small fine and continue along our way to world sales crown, but since they knew for a very long time, say at least a year or more, could they have not used the time to figure out how to resolve this mess. As a TDI owner I am getting tired of hearing radio silence from them. I have no problem w them getting what ever fine they settle with and they deserve it just as GM did and Toyota did before them. Do what you gotta do, cut a deal, fix the problem and move on.

  • avatar
    jthorner

    Make the people who directed and implemented these scams do jail time. One of the major problems with the modern world is that when people do horrible things in the name of corporations and get caught, fines are typically the punishment. Rarely do the executives who made the decision face jail time, or even have to give back the salary, stock and bonuses they got while committing the crimes.

    Make individuals accountable and, perhaps, bad behavior will be reduced. As it is now, the corporations almost always shield the actual criminal individuals from punishment.

  • avatar
    SoCalMikester

    buy low and hold. i agree that the people that OK these decisions should be jailed AND have to forfeit their assets to help pay for their lousy decisions..

  • avatar
    rcx141

    Eisenhower’s plotting table? Surely that should be Rommel’s?

    Anyway, nice to see Faultswagen taking some heat at long last

  • avatar

    Volkswagen is going to be walking on eggshells for a long time more to come because of all that recent hype in the media. They’re lucky they make good cars or they’d really be ruined from all the backlash!

  • avatar
    JustPassinThru

    When politics interjects into economics, this is what happens.

    And then, when all the executives are jailed…[email protected] THEM!…we’ll wonder why our factories can’t make money or modern product; why they all need government bailouts; why our cars run like Yugos and our farm-tractors like Soviet Five-Year-Plan models.

    Yup, they committed a crime. Maybe some time should be focused on why it is not a crime for unelected bureaucrats with no training in engineering or science, to DEMAND of their BETTERS that their BETTERS do magic things to “clean” engine exhausts.

    And, the importance of their decree on this was such that it went unnoticed for many, many years. Maybe…it’s just not relevant?

    Doesn’t matter. All the no-longer-free bureaucratic-nation-states are now after VW’s guts…and their money. They’ll get it – like the boy who killed the goose that laid golden eggs.

    I’d hope they’ll learn. I know they will not. History doesn’t just repeat; it rhymes.


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