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The Volkswagen Scandal Grows As Its Market Share Shrinks

The latter half of 2015 has been a bad time for Germany’s top automaker. Earlier this year, Volkswagen managed to overtake Toyota as the world’s leader in vehicle sales, but their time in the sun came to an abrupt end in September when the EPA accused them of fitting diesel vehicles with “defeat devices” which allowed them to cheat on emissions tests. Now that a few months have passed, we’re starting to see the initial consequences of these actions as more cars get indicted and post-scandal sales numbers are starting to filter in.

The Bad News

After the EPA’s initial accusation, Volkswagen came clean about the software they were using to pass emissions tests under false pretenses. When the software sensed the vehicle wasn’t under testing conditions, it shut down a power-intensive exhaust scrubber which drained a significant amount of the diesel engine’s power and gas mileage. This meant it performed better for the car’s owner, but it also pumped out between 10-40 times the EPA’s limit on nitrogen oxide, a leading cause of acid rain.

However, while Volkswagen may have decided to be honest about the existence of this defeat device, it may not have been completely forthcoming about the extent of its use. Early in November, the EPA released new allegations which say they found the device on a new set of vehicles, including some belonging to VW’s high-end brands, Audi and Porsche.

And as if that weren’t enough, an internal investigation has uncovered irregularities in CO2 emission standards for around 800,000 cars, including both diesel and gasoline engines, and further investigations have pointed to around 400,000 more. In 2012, VW’s CEO claimed that they would reduce carbon emissions by 30 percent within 3 years, and so engineers who couldn’t manage the cut cheated on the test by overinflating the test car’s tires and mixing in diesel to cut down on fuel use.

The Worse News

October sales numbers are in, October being the first full month since the scandal broke, and to no one’s real shock Volkswagen has slumped both in sales figures and in overall market share in Europe. In each case the numbers are only off by around 1-2 percent, but it’s still an ominous sign of things to come, and it’s the last thing Volkswagen needs considering that the CO2 debacle has added another 2 billion euros to the scandal’s basic cost. Many European governments link certain tax rates to carbon emissions, and so now VW has to pay the extra their customers would otherwise owe.

When people ask how this could have happened, most commentators point to Volkswagen’s pledge to beat Toyota as the world’s biggest car manufacturer and thus to all the corners they had to cut in order to make their goal a reality. And in all fairness, their deceptions did succeed.

Unfortunately, these cheats only succeeded for as long as they went unnoticed, and now that they’re public knowledge, VW has not only lost their coveted top position, they’re also starting down what’s promising to be a long and painful road filled with free repairs and customer compensations, government fines and concessions, and an international string of civil lawsuits.