Scandalous VW makes way for Ford dominance in diesel markets
The European automobiles giant Volkswagen has been shaken with a scandal so bad that might endanger the company's position in of the U.S. and other continents. This brings in hope for its main EU rivals such as Ford and Opel.
VW has admitted last week (19th Sept 2015) that the company systematically rigged diesel cars with software manipulation to pass the stringent U.S. emission tests. Environmental Protection Agency (EPA) fines and lawsuits can cause damage worth 50 billion dollars in fines to VW. In addition, VW can forget about selling cars in the U.S. market for the next five years. The sweet first spot in global sales that Volkswagen clinched from Toyota in the first part of the year 2015 has been overshadowed with the scandal. Analysts are now urging VW to concentrate on the core business and scrap prestige projects including the new Bugatti supercar, VW Phaeton sedan and even abandon the U.S. market altogether..
The controversy arose when EPA discovered that Volkswagen used software manipulation in the diesel motors sold not only in the U.S., but in other parts of the world too. Winterkorn, the group's CEO has resigned and a new boss, Matthias Mueller, head of Porsche is taking over the group for a fresh start at this moment of crisis. So far, the company said it identified 11 million diesel vehicles the group sold that could be in breach of regulations and will book a $7.3 billion provision in the third quarter to cover the costs. Immediately after the revelation, the carmaker has recalled 482,000 VW and Audi brand cars in the US after the Environmental Protection Agency (EPA) found models with Type EA 189 engines had been fitted with a device designed to reduce emissions of nitrogen oxides (NOx) under testing conditions.
German auto parts supplier Bosch is inherently at the heart of the scandal as the software manipulation was done by them for prototypes although there is proof that the company has warned VW about not using this tweak in production cars. This saved them from much humiliation.
Previously, GM was liable to 2.3 billion dollars of fines for faulty ignition and safety system. Then Toyota had to do a mass recall for the faulty acceleration error in their system. But speed is the key in crisis management. The sooner it is done, the better it is for the company, and here we are talking of a group that owns Porsche, Audi, Lamborghini, and Bugatti.
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