VW faces US criminal probe over diesel emissions fraud

Kuala Lumpur: Volkswagen is not the brand to choose at the moment is U.S, as the German giant is facing heavy criticism from its buyers. The U.S. Justice Department is conducting a criminal investigation of Volkswagen AG’s admission to cheating on federal air pollution tests, according to two U.S. officials familiar with the inquiry, reports Automotive news. As per sources, the German carmaker’s share price plunged about 23% on Monday, wiping out at least 15.6 billion euros (RM74.8 billion) of its market value because of the ‘defeat device’ scandal. The stock closed at 132.2 euros which are lowest in three years.

Read Also: Volkswagen, Audi cheated in U.S Pollution Tests, used “defeat devices”

This act will lead to a plethora of criminal inquiries which could take months or years and lead to charges against individuals and companies. VW's reputation is highly deteriorated and Volkswagen’s admission is putting pressure on CEO Martin Winterkorn to repair the reputation. Winterkorn, whose contract renewal is scheduled for a supervisory board vote on Friday, now faces a serious challenge to his leadership, said Arndt Ellinghorst, a London-based analyst for Evercore ISI.

“This latest saga may help catalyze further management changes at VW,” Ellinghorst wrote in a note Monday.

Although, the VW CEO Martin Winterkorn had already issued a public apology for this unmitigated PR disaster. It is also speculated that the final penalty for VW could be far less than the initial $18 billion figure that was stated based on the cost per violation and the number of cars. The major impact of this revelation will create a probe other major carmakers like BMW, Daimler, Fiat-Chrysler, GM and Jaguar Land Rover. The US Environmental Protection Agency (EPA) and officials in California will be testing other diesel vehicles for possible ‘defeat devices’, as per the Reuters. EPA is now looking into other VW Group diesel cars such as the Audi A6/Q5 and Porsche Cayenne

Taking care of the future investigations, BMW and Daimler have already issued statements to Automotive News Europe saying that their diesel-powered vehicles comply with US clean air rules. A BMW spokesman said, “There are clear laws and guidelines governing this and we adhere to them. Everything else is manipulation and deception and we don’t commit such fraud.”

Daimler also clarified on the scandal, “We heard of the EPA’s accusations against VW from the press, the issue described by the press does not apply to Mercedes-Benz Cars.”