Volkswagen Dieselgate Update: Shareholders Sue, South Korea Investigates, Bosch Defends

January 19, 2016

It's been another long week for Volkswagen and its ongoing Dieselgate crisis.

Although news of Volkswagen's 11 million emissions-test-cheating "clean diesels" broke nearly four months ago, and even though the company has said that the fix for those cars will be cheaper and simpler than initially thought, Volkswagen has made almost no progress in its efforts to resolve the situation in the U.S. In fact, last week the California Air Resources Board angrily rejected Volkswagen's proposed diesel recall, and the Environmental Protection Agency's position isn't expected to be all that different.

Over the past few days, it appears that the situation has gotten worse:

Volkswagen shareholders file suit: Volkswagen is facing a host of lawsuits over the Dieselgate fiasco. While class action suits in America are mostly focused on the diminished resale value of Audi, Porsche, and VW diesels, in Germany, shareholders are set to sue for loss of stock value. Shares in Volkswagen fell from around $170 in September, just before news of the defeat devices broke, to about $110 now, with some dips into the low $90s. 

South Korea files criminal charges against Volkswagen: Not to be outdone by their U.S. counterparts, who may fine Volkswagen up to $48 billion for its deceptive practices, South Korea's environmental agency has slapped the automaker with a double-whammy of its own. Like CARB, it has rejected Volkswagen's recall plan for not being up to snuff, and it's filed criminal charges against the company's South Korean head, Johannes Thammer. If he's found guilty, Thammer faces a fine of up to 30 million won ($24,800) and up to five years in prison. 

Bosch says that its technology can fix the problem: Details of Volkswagen proposed U.S. recall plan haven't been made public, but it's widely believed that catalytic converters are a key part of it. Although CARB and the EPA have made it clear that they're unsatisfied with Volkswagen's plan, Bosch insists that its catalytic converters can fix the problem. The supplier is much more muted when asked whether it knew that Volkswagen engineers had hacked the software on Bosch's diesel engine control units, allowing them to cheat on emissions tests.

It's unlikely that the headlines about Volkswagen will get much better anytime soon -- in fact,  they could get worse. Between public confidence in diesels, which has been deeply shaken by the crisis, and today's low gas prices, which make diesel a less-attractive option for car-buyers, Volkswagen diesels face a long, winding road to recovery.

 
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