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Volkswagen Scandal Update: Racing Deadlines as Debts Mount

By: Bridget ClerkinNovember 20, 2015
US Volkswagen head, Michael Horn, addresses the media at the LA Auto Show.

As the famous phrase goes, “Never ruin an apology with an excuse.”

It seems, in the wake of the scandal that has taken a bite out of both their cashflow and their credibility, the people at Volkswagen are taking that saying to heart.

Rather than excuses, the car company has been offering money to the nearly 11 million people worldwide who bought one of VW’s cars which were programmed to “cheat” on emissions tests –$1,000 each, to be exact.

VW has also been preparing for a looming Friday deadline, by which point it must explain to U.S. regulators how it intends to bring the affected cars’ emissions within regulation.

For their troubles, tainted car owners have been offered $500 toward vehicle repairs, along with a $500 gift card and free 24-hour roadside assistance services for three years.

In America alone, where nearly 482,000 of the cars were sold, Volkswagen has already shelled out $120 million for these concessions.

That total is a drop in the bucket compared to what the company is preparing to spend. VW has reportedly set aside nearly $7 billion to cover scandal-related costs, including expenses related to fixing the engines, which used software installed in the cars to trick computers into thinking they were running cleaner than they actually were.

Still, accepting the financial offering from VW won’t legally prevent tainted car owners from suing the company, which could lead to another big financial hit for the car manufacturer.

And Volkswagen will really have to start penny pinching if the Environmental Protection Agency is able to inflict the maximum fine on the company for its aggregate emissions violations – a total that could reach up to $18 billion.

But as costs are ramping up for VW, the clock on an important deadline is quickly running out.

November 20 marks 45 days from the eruption of the scandal and has been slated as the day where Volkswagen must submit their plan to bring all of the affected engines within American air-quality standards. The California Air Resources Board, better known as CARB, both set the deadline and will be responsible for examining what the company comes up with.

According to CARB spokesman David Clergen, the board has no obligation to accept VW’s plan, and will, in fact, have 20 days to review it before deciding how to proceed. He said he did not know what the plan would entail and added that any major decisions on CARB’s end would be made after the review process.

While much of how Volkswagen will move forward in America hinges on CARB’s evaluation of its plan, it has apparently already offered solutions for fixing one of the affected engine types in Europe, according to a report by Autoweek.

The article says VW submitted a proposal to transportation authorities in Germany on how to fix the 1.6-liter diesel engine used in more than half a million of the tainted cars that were sold in the country.

While details of the solution were not publically released, it allegedly includes both a hardware and a software update. A spokesperson for the car company also told the publication Automotive News Europe that other fixes were ready for nearly every affected engine type, excepting the 1.2-liter diesel.

For now, Americans will have to settle for the compensation VW has offered them – both monetarily and verbally.

"We've apologized,” Volkswagen Group of America President and CEO Michael Horn said at the Los Angeles Auto Show this week. “And we can't stop apologizing.”

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