Volkswagen Dieselgate update: Pushback on 3.0-liter diesel suit, execs rake in $455 million

May 18, 2016

There's been a lot of news about Volkswagen's ongoing Dieselgate crisis the past few days. Join us as we pour ourselves a bowl of muesli, drown it in pilsener, and recap the top stories:

1. Volkswagen may compensate struggling dealers:  VW's U.S. sales have been slow for many years, but they practically ground to a halt after the emissions-cheating scandal began making headlines in September. Volkswagen is now discussing ways to support VW dealerships until the trouble passes. However, Audi and Porsche aren't included in those talks...yet. 

2. Audi expects Dieselgate fallout to linger through 2016: Audi and Porsche have been directly affected by Dieselgate, with all diesels made since 2009 tainted by the scandal, stop-sales issued for new and late-model vehicles, and no new diesels on the horizon. Though sales of both brands have remained strong, Audi expects that the scandal's financial impact will be felt through at least the rest of 2016. That's not only because of the loss of diesel sales, but also due to the cost of fixing 2.0- and 3.0-liter diesel vehicles equipped with illegal defeat devices.

3. Audi planning for a host of new EVs: No one can say for sure whether diesels will ever recover from Dieselgate. In Europe, they'll likely remain strong sellers for a while, but here in the U.S., where they've never really taken off, their future is much more doubtful. What's clear, though--much to the chagrin of Volkswagen and several other automakers--is that electrics are the Next Big Thing. Accordingly, Audi plans to release one new electric car per year, starting in 2018.   

4. GM's Opel tainted by cheating claims: Dieselgate has basically turned every automaker into a suspect, a potential lawbreaker. Now, tests from an environmental group in Germany have led German officials to investigate emissions stats on Opels, too. General Motors has denied any wrongdoing.

5. VW's suppliers aren't happy: But then, you'd probably be miffed too if you were asked to cut prices on your products so that a multinational corporation could afford to pay billions of dollars in fines and repair costs for vehicles that it knowingly equipped with illegal emissions systems.

6. German government withheld criticism of Volkswagen management to save the company: The German state of Lower Saxony holds a 20 percent stake in Volkswagen. At a supervisory board meeting last month, representatives from Lower Saxony wanted to criticize the company's management for its behavior in 2015, but they didn't. Why? Because Chairman Hans Dieter Poetsch convinced them not to, "fearing their stand would be seen as a vote of no-confidence vote in VW's leadership", further damaging the company's reputation. Which raises the question: is there still confidence in Volkswagen's leadership? Apparently so, because...

7. ...Volkswagen top managers have raked in $455 million since 2011: Despite relatively flat profits over the past five years, Volkswagen's biggest earners have each taken home around $8.3 million in salaries and bonuses during that period. At least one group of investors has called that "corporate excess on an epic scale". We can't wait to see how it's portrayed in the movie.

8. Months after stop-sale issued, Volkswagen pushes back on 3.0-liter diesel suit: The EPA red-flagged 3.0-liter diesels from Audi, Porsche, and VW way back in November, and the brands responded almost immediately with stop-sales. In January, the U.S. sued Volkswagen for violating emissions regulations on both 2.0- and 3.0-liter diesels. Now, Volkswagen has asked that the suit involving 3.0-liters be dropped because the company didn't know about the problem. Which seems silly, because as we've learned from watching way too much Law and Order, ignorance of the law is rarely a good excuse.

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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