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Ethics Update: Volkswagen

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April 2, 2016
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Press Day At Volkswagen Factory

Volkswagen gets an extension to fix affected cars but is also hit with massive lawsuits.

 

A federal judge gave Volkswagen just one more month to agree on how to repair or replace the more than half million diesels now polluting U.S. highways so that they meet emission standards. At almost the same time, the firm was hit by a $3.67 billion lawsuit by nearly 300 institutional investors who joined together since Germany doesn’t allow class actions. The German court has received 70 additional lawsuits, largely from individual investors, seeking between $700 and $2.4 million in damages. Estimates of the penalties to be assessed on VW for using the highly unethical emissions testing strategy are believed to be “significantly more than the $18 billion previously estimated.” Criminal investigations are pending in both Germany and the United States.

Because of the difficulty in estimating the eventual costs resulting from the emission scandal, VW earlier postponed its 2015 earnings release planned for March and its April Annual Meeting of Shareholders. See “The Volkswagen Problem” in the February 2016 Strategic Finance.

 


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