Volkswagen - Not The First Time It Broke Emission Laws; But Should Be Its Last

Published on 30 Oct, 2015

Volkswagen - Business Research

Volkswagen recently copped to installing “cheat devices” on their diesel vehicles to pass emission tests, turning over 11 million cars worldwide into nefarious nitrogen oxide (NOx) producers.

These devices used crafty software to toggle filters that are designed to trap nitrogen oxide in exhaust fumes. The devices sensed whether vehicles were operating under test or real-world conditions, and accordingly, switched the filter on or off.

Volkswagen’s deceit was motivated by enhancing mileage, which was otherwise reduced by the nitrogen oxide filters’ activation.

As better mileage boosted Volkswagen’s sales and profits, mother Earth paid the price.

The filter hack adversely affected the environment; the German automaker’s product line released over 948,691 tons of nitrogen into the atmosphere for over seven years.

This isn’t Volkswagen’s first time; they’ve been penalized in 1973 and 2005 for trying to skirt the rules.

Volkswagen isn’t the only automobile giant to have engaged in such practices.

General Motors, Ford, Chrysler, American Motors, Nissan, Toyota, and other big players have been found guilty of installing defeat devices in their vehicles in the past. The following chart depicts several related instances.

Penalties on Automotive Giants

Penalties on Automotive Giants

As evident from past transgressions, the penalties they’ve paid are a paltry percentage of their profits; profits reaped by violating the norms.

Social responsibility, community service, and the environment are, at best, a cursory consideration for such car makers.

In spite of being ordered to pay a hefty fine and provide extended warranty to consumers, Volkswagen has carried on with business as usual, unabashed. To really make a difference and stop history from repeating itself, a strict ruling should be issued against Volkswagen.

What would be an ideal judgment against Volkswagen?

  • Recall vehicles, and provide compensation to car owners for a reduction in vehicle mileage after the removal of defeat devices
  • Impose a heavy fine
  • Ban vehicle sales for a period
  • Conduct strict checks before re-launch

An ideal judgment would be to impose a heavy fine, reparation that comes as close to — 100% of their profits since 2008 — as possible. This would make other automakers realize that there’s no real profit by violating the norms.

In my opinion, apart from this heavy fine, special initiatives such as tasking Volkswagen with reducing emissions from state-owned power plants, capturing and treating harmful industrial emissions, or setting up recycling plants — all in regions where they’ve sold their cars — would go a long way in undoing the damage they’ve undoubtedly done.