As 2015 draws to an end, the largest corporate scandal of the year will drag well into 2016 as fines and class action court battles ramp up. Wolfsburg is the Volkswagen built town put on the map in 1938 by the Nazis in 1938 pursuing their dream of building the people’s car. Wolfsburg rode Volkswagen's post-war boom to financial prosperity and the two are intertwined.
Wolfsburg's population of 120,000 people draws commuters from the surrounding areas with some 70,000 working for Volkswagen - Wolfsburg is as dependent on the auto sector as Detroit was in its heyday.
Many arguments may be made that the requirements were too stringent and no engine is able to meet these standards. Regardless, the defeat device software was able to detect when the engine was being tested downgrading performance and emissions. Once out of test mode, the software ramps up performance with tailpipe emissions more than 40 times specified amounts.
When found out, Volkswagen owned up to the fact pretty quick, there wasn't a round of denials further tarnishing their reputation. It has been widely reported that the EPA has the ability to fine the company a maximum of $37,500 per vehicle that breached standards. With approximately 11 million vehicles worldwide not meeting standards, fines of up to $18 billion are being bandied around that is a simple equation of vehicle versus maximum fine.
Regardless, shareholders are feeling pretty nervous as the financial hit to the company has the ability to be extraordinary. I am guessing inhabitants of Wolfsburg are also understandably concerned, they had no part in the decision making process yet are the ones to bear the brunt of these poorly conceived decisions.
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