Volkswagen, the German car manufacturing company admitted that they have installed certain software in their cars, which is designed to cheat emissions. This statement depicts the scope of a massive scandal, which can change the market condition of VW.
The company is going to set 6.5 billion euros ($7.3 billion) aside, as the repairing cost of the sold cars. This step is taken to win back the trust of Volkswagen customers.According to American regulators, 484000 cars were affected in the US previously.
VW admitted that the world would feel the fallout from this scandal. The company is going to suffer huge losses, as it has to repair more cars than it sold last year.VW sold around 10.2 million cars in 2014 worldwide by the way.
The stock market went all upside down with this announcement from Volkswagen on Tuesday. There was fallout of 20% share ($119.50 or 107 euros) in Frankfurt. As soon as the emission problem news broke, the company shed near about two-fifths of its public stock value.
“Volkswagen is working intensely to eliminate these deviations through technical measures,” Said VW.
Environmental Protection Agency (EPA) made VW to admit that they have installed the software in their diesel cars, which can detect if the cars were being checked for emissions, and if they were checked in real-, the software lowered down the emissions accordingly. Thus, they had planned to cheat the tests. SouthKorea has started investigations for some of the VW models today and Europe is expected to open the investigations in a few weeks. After this act on Friday, the pressure on the company has been rising drastically.
The cars sold between the years 2009 – 2015 spewed 40 times more than allowed nitrogen oxide on the road. They passed emission tests, however.
The company is already facing a fine of $18 billion in the US and the Department Of Justice is launching an enquiry. In the meantime, VW had apologised and promised to regain the trust of their customers.
Michael Horn, VW’s U.S. chief, said at an event in Brooklyn Monday night“Let’s be clear about this: Our company was dishonest with the EPA and the California Air Resources Board and with all of you,” “In my German words, we have totally screwed up.”
Martin Winterkorn, Volkswagen’s CEO is expected to resign by the week’s end over the emission scandal issue.