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Severity of the VW Auto Fraud Scandal

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Volkswagen was caught committing auto fraud on the world’s biggest stage – and now they could be paying for it in a major way.

VW was found to have cheated on its emission tests in the United States. Now, lawsuits, fines, and recall costs will likely cost the company tens of billions of dollars. It will also likely temporarily end VW’s status as the world’s largest car manufacturer.

As part of the emissions scandal, Volkswagen is expected to recall 11 million vehicles around the world. In addition to this recall, VW will have to pay government fines. There will also be long-lasting damage to the VW brand and an expected drop in sales.

In preparation for the upcoming penalties, Volkswagen has set aside 6.5 billion Euros ($7.5 billion USD). However, many expect the total costs of the scandal to exceed that amount – some experts even estimate that the bill “could ultimately be five times as large.”

How Much Will Volkswagen Pay?

Volkswagen is expected to pay for this emissions scandal in four major areas: financial costs, sales, shares, and brand value.

Financial Charges

These charges include fines, lawsuits, and the costs of the recall. One analyst estimated that this portion of the scandal could cost VW $39 billion USD or more.

A large chunk of the financial costs will come from the U.S Environmental Protection Agency, which is expected to fine Volkswagen as much as $18 billion. That number comes from the fact that each of the 482,000 cars found to have deceptive software could all receive a $37,500 penalty.

If VW cooperates with authorities (which they are expected to do), then the fine will likely be much lower – around $14 billion USD.

Other financial costs include lawsuits from all across America. A single county in Texas is already suing Volkswagen for $100 million – and that’s just from one lawsuit.

Other countries with rigged emission reports – including Germany and other European countries – are expected to levy fines of their own against the company.

Class action lawsuits from America and Europe could add up to billions more in fines.

Sales

Volkswagen is expected to report 50% of its previously expected profits for the year (6.4 billion Euros from $12.8 billion Euros).

Those losses will continue into next year.

Worsening sales figures could paint an even bleaker picture for Volkswagen. Despite the automotive market’s double-digit growth in the United States in September 2015, VW sales barely saw any growth (due largely to the fact that the company was forced to halt sales of many diesel vehicles).

For years, VW has been the world’s largest automaker. Last year, Toyota edged out Volkswagen, producing 10.23 million vehicles compared to Volkswagen’s 10.14 million, although VW would later pull ahead in the first six months of 2015.

One analyst claimed that it would take Volkswagen “at least five years” before it would have another chance at passing Toyota.

Shares

Volkswagen’s shares have dropped by about 40% since the scandal hit, evaporating $33 billion USD from the company’s market value.

Brand Value

Volkswagen’s brand value was recently assessed at $31 billion by Brand Finance. The scandal has wiped $10 billion off that value. Rebuilding the value of that brand will take time and money.

What Does the Volkswagen Scandal Mean for You?

Auto fraud lawyers in Oklahoma City can help individuals like you stand up against the world’s largest automakers. Whether you’re battling against the world’s biggest automaker, Volkswagen, or a local automotive dealer, auto fraud attorneys specialize in everything related to auto fraud. Call today for a free case review: 405-397-1717

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