More than two months have passed since the Volkswagen emissions scandal broke out and the company is still under thorough investigation revealing that many more vehicles are affected by the cheating software and the firm’s fraudulent techniques.
Last Monday, the Volkswagen (VW) chief executive officer Matthias Müller stated in Wolfsburg, Germany that the majority of VW’s problematic vehicles in Europe are going to be fixed. Specifically, his exact words went like this: “For about 90% of the group’s vehicles in Europe the solutions are confirmed. The cost for the retrofitting is technically, physically and financially manageable.”
However, even if his sayings appeared reassuring, it will be never enough to regain the company’s lost trust which has effectively slowed down its sales. Further, no specific details are yet announced regarding the way the firm plans to fix the 11 million vehicles in which the cheating software had been installed.
VW and the cheating scandal
VW and its history have been tainted by the recent scandal. This colossal company could be affecting the EU and world economy since it employs about 600.000 people, has annual revenue of $269 billion and manufactures 1 out of 9 vehicles in the world. Thus, the above makes this scandal too important not only for the company but also for the world’s economy.
The CEO of VW made it crystal clear during the company’s Assembly on 23 November when mentioning to the managers that “investigations are running at full speed”. Matthias Muller also underlined that it is a very good evolution the fact that reversing the situation would be totally achievable. Furthermore, Mr Muller said that “VW’s internal enquiry into the scandal was very complex and would take many months to complete, though he promised a report on its progress in mid-December”.
But as the investigation is full development, the US regulators start now finding more and more cases where the German car manufacturer is again not playing by the book.
The investigation further expands
The US Environmental Protection Agency (EPA) together with the California Air Resources Board are broadening the ongoing investigation by looking into oldest versions of VW, Audi and Porsche vehicles with 3.0 liter diesel engines that were manufactured from 2009 till now. VW had claimed not to have cheated on the 3.0-liter Audi-engineered motors but guess what; it was discovered last Friday by U.S regulators that a specific part of the vehicles’ software is also illegal.
What is more, the European Commission‘s view on this scandal is that member states who approved Volkswagen vehicles have to probe their own investigations. More specifically, Lucia Caudet, Commission’s spokesperson, had stated earlier this month: “We want clarity fast, but it is equally important to have the complete picture”.
VW’s economic performance
Volkswagen has realized a 5.3% fall in its car sales last October. Deliveries also dropped by 1.3% in Western Europe in comparison to last year. Germany, Italy and Spain were the countries to experience the least demand for the German cars.
The barrel of the VW scandal does not seem to have a bottom and the company is deeply feeling that due to a 34% loss in market value and the numbers that keep on dropping.
The company is now trying to bring back unsatisfied customers by providing incentives such as zero-down payment and zero-percent financing deals in the United States whereas in Germany VW provided an average 11.2% reduction off the car prices last October.
Nevertheless, while sales are dropping in the US and Europe, global sales are thriving in China by 1.8%. Is China not affected by this scandal or is it too soon to make conclusions? Time will tell.
All in all, the company’s performance is expected to be strongly influenced by the final report of the US regulators’ investigation which is bound to shed light to this scandal. However, the point that remains to be answered by the German giant manufacturer is whether they will change attitude and philosophy after the disclosure of the cheating software or they will continue business as usual; as if nothing had happened.
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