Germany’s VW Ag a few years ago apparently tried to save some development funds by rigging diesel engines to cheat on emissions tests and is now facing the prospect of one of the most costly repairs ever conducted globally.
Volkswagen, the largest European automaker, admitted last month it had equipped up to 11 million autos with diesel emissions software designed to fool regulators and will now have to repair all of them to be in compliance with the pollution standards. The process is already appearing as one of the most expensive and complex in auto industry history. The German carmaker will have to deliver software fixes to some of its models – while others will need to be equipped with parts that weren’t designed for the vehicles already on the road. And the modifications could need special service centers set up specifically for the purpose. And the fixes will need to be in compliance with regulations from dozens of countries all over Europe.
“I can’t think of any other recall that would be as comprehensive,” comments Jake Fisher, director of automotive testing at Consumer Reports magazine. “It’s really an expensive rework.” And the repair and recall costs are just part of the expenses for the company. The automaker is already paying up – it has to compensate dealers for having cars they can’t sell. It already faces hundreds of lawsuits in the US alone – ad the bulk of the affected vehicles is actually in Europe. And then there are the fines – from the US alone it could reach up to $18 billion and with other regulators tallied in the final bill on regulatory paychecks alone could reach more than 30 billion euros ($34 billion).