Volkswagen Dieselgate update: Dealers' Susan Powter moment, worker alleges diesel data deletion

March 18, 2016

It's Friday, and that means it's time for a review of the week's headlines related to Volkswagen's ongoing Dieselgate crisis. Over the past few days, VW U.S. dealers had something of a meltdown, a former employee alleged that Volkswagen engaged in shady record-keeping practices, and investors filed a massive lawsuit.

Dealers say "stop the insanity": Whether they meant to invoke 90s diet guru Susan Powter or not, a group of 12 U.S. VW dealers have had enough of Volkswagen's management style and hints of a scaled-back presence in the America.

The head of VW's national dealer council, Alan Brown, and many of his colleagues had been patient since the emissions-test-cheating scandal broke back in September because of their good relationship with Volkswagen's U.S. head honcho, Michael Horn. Now that Horn's gone, though, relations with the folks in Germany have soured. Among dealers' biggest complaints is the fact that they've spent $1 billion over the past several years, preparing for Volkswagen's massive push to become the world's biggest automaker. With that plan scrapped and sales in the tank because of the scandal, some dealers have reached their wits' ends.

Brown and 11 colleagues flew to Germany to talk specifics on VW product development, sales goals, and other key points. He's also hoping that the company will reaffirm its commitment to the U.S. market--something that VW brand chief Herbert Diess has been oddly reluctant to do. If the talks go south, chaos could ensue next week at the National Automobile Dealers Association convention. Dealers are also prepping a lawsuit against Volkswagen.

Former employee alleges VW deleted diesel data: Last year, Daniel Donovan worked on a Michigan-based IT team responsible for maintaining VW data related to injury and product liability cases. In September, however, Donovan says that VW asked him and his teammates to begin deleting data, and at least some of that data was related to diesel vehicles. Donovan says that the company insisted the data dump continue for three days after the news of Dieselgate first broke, and that VW wasn't keeping backup disks of the information.

Donovan complained to his supervisor, and on December 6, 2015, he was fired. Now, Donovan has sued for wrongful termination, claiming that VW violated Michigan's whistleblower protection laws. Whether VW did so remains to be seen, but the allegations are pretty unflattering, to say the least.

Volkswagen investors sue for big money: Donovan and U.S. dealers aren't the only ones suing Volkswagen. You might recall how upset shareholders were when they learned that former CEO Martin Winterkorn knew about the looming Dieselgate scandal weeks before the news broke but said nothing, which gave them no opportunity to unload their stocks. Now, 300 of them have filed suit seeking €3.3 billion ($3.7 billion) in damages.

Volkswagen financial services takes a $400 million hit: Speaking of declining values, Volkswagen's German financing arm has written down a €353 million ($399 million) loss, and its U.S. arm registered a smaller but still sizable hit of €96 million ($108 million). Both write-downs are related to sharp declines in the value of assets the financing arms own--namely, Volkswagen vehicles. 

Note: For purposes of clarity, "Volkswagen" has been used to refer to the Volkswagen Group parent company, while "VW" has been used to refer to the company's popular mass-market brand of automobiles.

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