One automotive journalist, in recently addressing what he called the latest manifestations of “automotive insanity” wrote, “[But]… no discussion of automotive insanity would be complete without the latest on Volkswagen’s ongoing farce.” An important story—VW’s alleged intentional falsification of diesel emissions—has faded from the headlines in the last while.
The US VW dealers reacted to the sudden departure of Volkswagen US CEO Michael Horn on March 9th. Officially described as stepping down by ‘mutual agreement’, Mr. Horn did not comment publicly on his departure, although he reportedly said the position was ‘his dream job’ and that he had refused another offer within the company.
Alan Brown, president of Volkswagen’s National Dealer Council was not to be silenced, however, reportedly responding, “I’m telling you that the dealer network is becoming very, very, very frustrated very quickly.” The 652 US dealers liked Mr. Horn: they felt he had improved communications, fought for their market in VW’s Wolfsburg headquarters, and reportedly advocated for retail sales over less-lucrative fleet sales.
The dealers are also aggrieved by VWs “failure to fix [their] scandal plagued vehicles,” by what they say is a “disappointing product line-up,” and by the “culture of mistrust” the company may have created. They want a continuation of the subsidies they have been receiving from VW as brand sales continue to slump, declining 10 percent from September 2015 through February 2016 compared to the same period a year ago.
At last reporting, Mr. Horn intended to convey this message to Wolfsburg, and to urge VW’s top executives to attend the National Automobile Dealers Association conference in Las Vegas, upcoming at the time of writing from March 31 to April 3, 2016 to reassure dealers they are committed to fixing the brand’s US problems.
There are also other ‘fallout’ problems. US VW diesel owners are seeking class action status in furtherance of their demand that VW buy back their vehicles. And the US Department of Justice is reportedly suing VW on behalf of the US Environmental Protection Agency for civil penalties that could exceed $18 billion. Both of these cases are before Senior US District Court Judge Charles Breyer after a judicial panel decided to consolidate suits against VW in San Francisco, partly because there are so many VW dealers and owners in California.
VW is currently under order by Judge Breyer to present a detailed plan by April 21st for fixing nearly 600,000 diesel cars to make them compliant with US clean air laws and for making compensatory payments to owners or risk the possibility of a trial this summer. VW, and even its executives, could possibly also face separate criminal charges.
Legal commentators in the media are making all sorts of predictions: “fraudulent deception …makes the case susceptible to a very substantial punitive damages award”; [it’s] a numbers game…not whether they’ll pay…but only how much”; and, a consumer fraud specialist on owners’ damages: no fix—the difference between what they were told they were buying and what they received; fix found—loss in value plus damages for higher operating costs.
This story will not go away for some time.