Volkswagen is a world-renowned German motor vehicle manufacturer company and the world’s one of the largest car makers. One of Volkswagen’s marketing agendas was “clean diesel” vehicles. However, Volkswagen used deceptive engines in their vehicles and these engines were programmed to cheat on emissions tests to hide the problem. When the truth comes out in 2015, Volkswagen had to compensate the consumers as well as has to pay billions to compensate for the environmental damage caused by the scandal.
Despite paying billions in compensation Volkswagen didn’t become bankrupt because they didn’t pay the total compensation at once. Moreover, Volkswagen only paid compensation in the U.S. but they don’t pay anything in Europe. Moreover, Volkswagen is the biggest automaker in the world with strong financial background. In 2015, Volkswagen’s net loss was four billion euros due to the scandal and compensation but they come back strongly and made a net profit of 19.3 billion euros in 2021!
Volkswagen Emissions Scandal
The Volkswagen emissions scandal is also known as Dieselgate, and Emissionsgate, and this scandal begins in September 2015. The United States Environmental Protection Agency (EPA) issued a notice of violation to Volkswagen about their “clean diesel” vehicles. According to a report, Volkswagen intentionally programmed turbocharged direct injection (TDI) diesel engines so that they could control the emission during laboratory emissions testing.
Volkswagen designed this type of engine to meet the US standards for vehicles’ NOx output. However, the United States Environmental Protection Agency (EPA) found out that Volkswagen vehicles were emitting up to 40 times more NOx in real-world driving. Volkswagen used this programmed engine in their 11 million cars worldwide from 2009 to 2015. More than 500,000 vehicles with this type of engine were sold in the USA.
U.S. and EU Emission Standards for NOx
| Car | EPA (United States) | Euro5 | Euro6 | Comment | ||||||
| Limit | Dyno | WVU measurement | Limit | Register | Measurement 2011 | Limit | Register | Measurement 201x | ||
| Vehicle A Volkswagen Jetta | 0.043 g/km | 0.022 g/km | 0.61–1.5 g/km | 0.18 g/km | N/A | 0.62 ± 0.19 g/km | 0.08 g/km | N/A | N/A | lean-NOx trap (LNT) (Vehicle A) |
| Vehicle B Volkswagen Passat | 0.043 g/km | 0.016 g/km | 0.34–0.67 g/km | N/A | N/A | 0.62 ± 0.19 g/km | N/A | N/A | N/A | urea-based selective catalytic reduction (SCR) system (Vehicle B) |
List of Vehicles that were Affected by Programmed Engine
| 2.0 Liter Diesel Vehicle | 3.0 Liter Diesel Vehicle |
| Jetta (2009 – 2015) Jetta Sportwagen (2009 – 2014) Beetle (2013 – 2015) Beetle Convertible (2013 – 2015) Audi A3 (2010 – 2015) Golf (2010 – 2015) Golf Sportwagen (2015) Passat (2012 – 2015) | Volkswagen Touareg (2009 – 2016) Porsche Cayenne (2013 – 2016) Audi A6 Quattro (2014 – 2016) Audi A7 Quattro (MY 2014 – 2016) Audi A8 (2014 – 2016) Audi A8L (2014 – 2016) Audi Q5 (2014 – 2016) Audi Q7 (2009 – 2016) |
Key Timeline of Volkswagen Emissions Scandal
- September 18, 2015: The United States Environmental Protection Agency (EPA) issued a notice of violation to Volkswagen about their “clean diesel” vehicles. According to this notice, Volkswagen used programmed engines in their vehicle models year 2009-2015. According to the report, the affected vehicles emit up to 40 times more pollution than emissions standards allow.
- September 25, 2015: The United States Environmental Protection Agency changed its manufacturer guidance policy and introduced the defeat device screening protocols.
- November 2, 2015: The EPA issued a new Notice of Violation of the Clean Air Act to Volkswagen and other car companies for selling certain types of car models from 2014-2016. According to the report, the car sold in this time frame emitted up to nine times more pollution than emissions standards allow.
- January 4, 2016: The Department of Justice filed a complaint against Volkswagen, Audi AG, Volkswagen Group of America, Inc., Volkswagen Group of America Chattanooga Operations, LLC, Porsche AG, and Porsche Cars North America, Inc. The complaint was on behalf of EPA, and the companies were alleged to violation of the Clean Air Act.
- June 28, 2016: Volkswagen started a multi-billion dollar settlement process to resolve the issue with their 2.0 litter’s diesel engines. They entered into the settlement and it officially took effect on October 25, 2016.
- December 20, 2016: Volkswagen started their 2nd settlement to resolve the issue with their 3.0 litter’s diesel engines.
- January 6, 2017: EPA and California Air Resources Board approved emissions modifications for quite a few car models of the year 2015. The car models were VW Beetle, Beetle Convertible, Golf, Golf SportWagon, Jetta, Passat, and Audi A3 Diesel Vehicles.
- January 11, 2017: Volkswagen pleaded guilty and agreed to pay a $2.8 billion criminal penalty. They agreed to plead guilty to three criminal felony counts. Moreover, Volkswagen also agreed to plead guilty and pay $1.5 billion as compensation to cover EPA’s claim for civil penalties against Volkswagen. The compensation also included the claim for customs fraud from the U.S. Customs and Border Protection.
- March 15, 2017: The court-appointed Wilmington Trust, N.A. as Trustee of the Environmental Mitigation Trust.
- April 12, 2017: The United States Environmental Protection Agency approved the VW National Zero Emissions Vehicle Investment Plan.
- May 19, 2017: EPA and California Air Resources Board approved the emissions modifications plan. This plan is approved for the model year 2012 – 2014 VW Passat diesel vehicles with automatic transmissions.
- July 27, 2017: EPA and California Air Resources Board approved the emissions modification that was proposed by Volkswagen for the model year 2009 – 2014 diesel Jetta, Golf, Beetle, and Audi A3 diesel vehicles.
- September 7, 2017: On this day, the EPA and California Air Resources Board disapproved Volkswagen’s Proposed Emissions Modification for the model year 2012-2014!
- October 20, 2017: On this day, the EPA and CARB approved the emission problem solution for Audi, Porsche, and VW Diesel 3.0 Liter vehicles.
- December 18, 2017: On this day, the EPA and CARB approved the emission problem solution for Audi Diesel 3.0 Passenger Cars.
- April 18, 2018: EPA and CARB approved the 2nd phase of emissions modifications for 2015 model year cars that are 2.0 Diesel Vehicles.
- May 18, 2018: EPA and CARB approved emissions modification for Generation 1.1 SUVs that are 3.0-liter subject vehicles.
- July 13, 2018: EPA and CARB approved emissions modification for Generation 1.2 SUVs that are 3.0-liter subject vehicles.
FAQs about Why didn’t Volkswagen become Bankrupt after Paying Billions in Compensation
How much did Volkswagen pay for dieselgate?
Volkswagen paid more than $33.3 billion in fines, penalties, financial settlements, and buyback costs for their dieselgate scandal.
How did Volkswagen get away with diesel deception?
Volkswagen programmed their engines in a way that when the car is tasted, it reduces emissions. However, when the car is being driven in the real world, the software stopped reducing the emissions.
Can I still claim against Volkswagen?
Yes, you can still claim against Volkswagen even if you don’t own the car now. You just need the proof of ownership and the car’s VIN number to file a claim against Volkswagen.
How much did Volkswagen lose in the scandal?
It is difficult to review the whole scenario and determine the actual loss of Volkswagen. But, Volkswagen did lose $42.5 billion because its share lost 46% of its value!
References:
https://www.propublica.org/article/how-vw-paid-25-billion-for-dieselgate-and-got-off-easy
https://www.reuters.com/article/us-volkswagen-emissions-consumers/u-s-volkswagen-owners-your-compensation-from-scandal-settlement-idUSKCN0ZE1V9
Last Updated on August 13, 2022 by Ana S. Sutterfield
Magalie D. is a Diploma holder in Public Administration & Management from McGill University of Canada. She shares management tips here in MGTBlog when she has nothing to do and gets some free time after working in a multinational company at Toronto.
