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Volkswagen’s Diesel Emissions Scandal

» Posted July 5, 2016Resources | Share This Post

Volkswagen has been under fire for cheating on diesel emissions testing. The car manufacturer admitted that it rigged its vehicles to perform differently in emissions testing than when used in the real-world.

Because the cars scammed the emissions testing process, the true level of nitrogen oxides being emitted into the atmosphere was obscured. The Chicago Tribune reports that when the deception came to light, it turned out that VW's diesel cars were emitting 40 times the permissible levels of nitrogen oxides.

Now that the scam has been revealed, the ramifications have been far-reaching. The scandal is one illustration of what happens when automakers release vehicles that do not perform as promised.

While the VW deception was a large-scale fraud perpetrated on millions, there can be just as much damage done over time when individuals are sold cars by dealers that do not live up to basic expectations.

Any car buyer who ends up with a lemon vehicle should work with an attorney to gain a better understanding of California car lemon law so they can determine what recourse, if any, is available to them for the damage they have endured.

Volkswagen's Emission Deception Has Continuing Aftershocks

When a car manufacturer releases a product that fails to perform as promised, the long-range implications of this product release may not immediately be known. In the case of VW's emissions scam, around 11 million vehicles worldwide were affected.

The ramifications of this deception are grand in scale and consequences continue to reverberate, not just for VW but for many others who trusted the company as well.

The Chicago Tribune reports, for example, on pension funds that had been invested in VW stock.  Norway has a state pension fund valued at $850 billion, which is the largest sovereign wealth fund in the world. The fund had a $1.2 billion stake in Volkswagen before the scandal broke. Norway's pension fund, called the Norges Bank Investment Management, was the fourth largest stakeholder in Volkswagen.

After news of the scandal broke, the investment that Norges Bank Investment Management had in the company fell dramatically. As of mid-May, it was worth just $720 million.  The fund has joined a class action suit with other investors in Volkswagen. It is seeking to have the company make up some of the $500 million in losses the fund experienced as Volkswagen's stock fell close to 40 percent after news of the scandal broke.

Volkswagen set aside $18 billion to pay for the issues raised by the emissions cheat. The company was negotiating a deal with the United States to resolve claims against it, with an estimated cost expected of around $10 billion.  There have also been more than 70 lawsuits filed against the company, and it is not clear if the costs to resolve these suits will be below the $8 billion in additional funds VW has set aside.

Clearly, the price of fraud in this case was astronomical. However, even when it is just one consumer harmed by a car manufacturer's release of a defective product, the damages can still be grave for that victim.  California’s car lemon law aims to protect the average consumer who is harmed by car manufacturers when the products released are unsuitable for use.


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