Volkswagen Still Paying for Emissions Scandal

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A federal judge in Detroit Friday signed off on what could be one of the last big developments in the Volkswagen diesel emissions scandal, ordering the German maker to pay a $2.8 billion criminal penalty negotiated as part of a settlement with the U.S. Justice Department last January.

The ruling now brings to around $30 billion the costs VW will incur after being caught rigging two of its diesel engines to pass U.S. emissions tests — a figure that includes the price of buying back almost 500,000 vehicles sold in the country.

This quote, from an NBC News article by Paul Eisenstein, describes yet another financial blow to Volkswagen as a direct result of the emission scandal first revealed back in September 2015. The troubled automaker’s current stock value is 140EUR,  a far cry from its pre-crisis peak of 252.20EUR, and continues to dip regularly – most noticeably when the press gets ahold of bad news of course.

To its credit, Volkswagen has taken the proper tone in its communications surrounding the issue. In a display of simple talk not often seen in massive corporate cases, VW general counsel Manfred Doess was quoted as saying, “Volkswagen deeply regrets the behavior that gave rise to this case. Plain and simple, it was wrong.” The reality of this situation is that, while communicating the right way will mitigate millions of dollars worth of damage, operational realities mean there is no getting out without a massive financial hit.

The crisis won’t destroy what’s listed as the world’s eighth-largest company by revenue, especially considering the fact that consumers are still largely enjoying their experience with VW vehicles, but it will stand as a reminder for brands considering crossing the line to chase ever-more profits. Proper crisis management can help any situation, but when you get caught doing wrong there’s a price to pay that no amount of maneuvering can prevent.

Erik Bernstein

P.S. from Jonathan Bernstein —  I have to wonder if VW made SO much more money from cheating that even after the cost of this crisis, they came out ahead.  That’s the kind of math too many global players like to use.

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