Volkswagen Scandal Goes From God Help Us to May God Have Mercy on Your Soul
On October 21 in Frankfurt, Germany, the Volkswagen Auto Group made yet another grim announcement to the press, who clearly smelled chum in the water. The company is currently investigating whether “substantially” more vehicles were equipped with its emissions test-cheating software than previously uncovered. This seems to be part of the company’s ongoing efforts to see just how disastrous a financial public relations crisis can actually become without a company going bankrupt.
In September, the German automaker already confessed that as many as 11 million cars were outfitted with a diesel motor known as the EA 189, which features the illegal test-rigging software. Furthermore, the company has also agreed to recall and repair 8.5 million European vehicles and 500,000 more in the United States. Depending on the results of the investigation, more recalls could be on their way.
Not only that, but if the latest investigation reveals that even more cars are infected with the software, Volkswagen’s stock and reputation could sink even lower. In Germany, polls show that many Germans still have a favorable impression of the company, in spite of everything. Car owners and investors are less forgiving.
Already, the lawsuits are being filed in courtrooms around the world. Volkswagen celebrated the end of September — possibly the worst month in the company’s history — with news of the first class action lawsuit in the United States. On September 30, law firm Gardy and Notis, LLP filed a securities fraud class action lawsuit on behalf of investors who purchased stock in Volkswagen AG or its U.S. subsidiaries. The law firm is still looking for a lead plaintiff in the case. Of course, that class action suit doesn’t include the actual car owners themselves, who will surely be represented in a separate class action suit.
The shareholder class action lawsuit is just the latest investor relations nightmare faced by the German automaker. Unfortunately for everyone involved, the situation could become even more dire as the new investigation unfolds.