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US Sues VW For Breaking Environmental Rules…Were They Deserving?

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Over the past decade the Canadian conscientious, as well as the auto industry, has been focused on decreasing our carbon footprint. Whether to decrease our overall dependence on oil production or to save our atmosphere, many car buyers are looking for better-running efficient cars and have changed their focus.

Instead of looking for big SUVs to rule the road, car buyers are looking for cars that have integration systems and more intuitive designs to a degree that often requires innovations in the auto body repair industry subsequently. VW, which has always been on the cutting edge of innovation and safety, seems to have missed the boat when it comes to trying to reduce their environmental impact. So much so that even the US government is suing them for their dirty practices.

In one of the most highly publicized automotive cases in recent history, the US Department of Justice is taking on VW for $48 billion dollars. Their alleged crimes? The allegations read that they beetle-retired-1419037.jpg put in place and disregarded emissions rules, consciously misleading the industry and the consumer. If found guilty, the hefty fines could put a real sock to their bottom line. Following the release of information about the case, their stock is already in a free fall.

Shares over the past six weeks have fallen to an all-time low, losing over 6% of its value. With a market that is already experiencing turmoil due to China’s economic concerns, that could spell some real trouble for a company that has not only a scandalous reputation for its unscrupulous practices, but now has a shaky economic outlook as well.

Last September, VW couldn’t hold out against the many complaints launched against it, and finally had to admit that they had installed devices into their cars to trick emissions test to register a “pass.” Installed on their 2.0-liter diesel models, the practice was more devious than anyone thought possible and conducted on a systematic car-making level.

Legal scholars believe that VW could incur fines over $37000 per violation per vehicle. That could equal as much as $3700 plus per “defeat device” plus an additional $3700 plus per day. At that rate, VW could be looking for more than just a little damage control when all is said and done. In the US alone, the DOJ says that the shifty devices were installed in some 600,000 vehicles alone. That says nothing about cars that were released in other countries. Adding up, VW may be in more trouble than it was worth when they made the decision to try to fool the regulations.

The precedent for most automakers is that the maximum fines are rarely imposed upon those who try to cheat the system. Analysts believe that it is unlikely that VW will incur the potential upper fines that they could face. Why do they believe VW will be let off easily? When the US government went after Toyota for over 58 billion dollars for similar emissions violations in the early part of this century, the case was settled for almost half of what they originally sought in fines and damages.

Stockholders are reserving panic, realizing that a lot of the time cases brought in US courts tend to be nothing but smoke and mirrors. The big lawsuits have a tendency to become mediocre slap on the wrists, so there hasn’t been a mass exodus from VW supporters and shareholders just yet. VW has estimated that the cost to fix the emissions discrepancy for their almost 8.5 million cars will be a drop in the bucket, which leads us all to question why they didn’t just build a better emission car than to try to trick the system to begin with.

There are four counts outlined in the lawsuit waged against VW. They include violating the US Clear Air Act, failing to report emissions violations and the tampering of emissions control system. The problem that VW will face is that it wasn’t just emissions failure, it was systematic, intentional trickery on the part of the automakers to fool both governmental agencies and consumers alike.

The biggest problem is that this lawsuit could quickly snowball into more litigation for the company. If found guilty, Civil lawsuits could abound putting a damper not only on the carmaker’s credibility in the market and their reputation as a corporation but also on their overall wealth and ability to recover from the scandal they are being accused of. What will be the fate of VW? We all have to stay tuned in 2016 to find out.

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