Volkswagen cheatd on diesel emissions, faces $ 18 billion fine

[Malthus]

The cause of action is that the damage is caused by the false advertising regarding the emissions.  If, as you seem to claim, there is no damage which results from a car that pollutes more then there is no cause of action and the company need not recall the vehicles at all.  In relation to the second point typically all a class member need to is establish they are a member of a the class.

That's what makes this case unusual.

The extra pollution, a result of the false advertising, causes damages to everyone, because consumers are, inadvertently, riding around in polluting cars.

Now the consumers know about it. There is a patch available, but presumably, the patch, while it solves the pollution problem, will degrade the performance of the engine.

So what are the individual damages to the actual car owners? Not, I assert, simply that they have been polluting everyone inadvertently. That is a problem (in that consumers have been fooled) and is presumably worth something in terms of damages - but aside from those set by some sort of statute, they will be hard to quantify.

OTOH, the damages caused by the degredation of the performance of the engine are possible to quantify - the difference between the value of the engine that was promised, and the one after it has been patched. The manufacturer can't argue that the patching was a novus actus interveniens in its defence, because it was caused by its own lying to the regulators, and so foreseeable.

Therefore, it makes more sense to have a class or subclass of those with the patch, with a substantially more significant award - they would be entitled to the 'lied to and so became an inadvertant polluter' award (whatever that may be), *plus* the 'my engine doesn't perform as advertised' award.

But your last point makes more sense.  If there is another class proposed containing only those who have gotten the fix (which I dont think there is at this point) then that would provide an incentive for owners to take advantage of the recall in order to be part of the class.  But classes are normally set as at the time the court pronounces the order or the settlement is made.  Not after so as to avoid contingent awards.

Orders and settlements are far in the future right now.

[Zanza]

Is it actually established that the customers were ever promised the car as it behaves with the exhaust cleaning system being deactivated?

Or was it always advertised as it would behave with the exhaust cleaning system activated?

If it is the latter, is there any actual damage to the individual car owners if VW now flashes the ECM and always activates the exhaust cleaning system so the car fulfills the EPA standards and behaves as advertised?

[Zanza]

The Volkswagen CEO resigned today, but did not admit any personal guilt.

The supervisory board has also asked the German state prosecutor to start a criminal investigation into Volkswagen.

[Barrister]

Is it actually established that the customers were ever promised the car as it behaves with the exhaust cleaning system being deactivated?

Or was it always advertised as it would behave with the exhaust cleaning system activated?

If it is the latter, is there any actual damage to the individual car owners if VW now flashes the ECM and always activates the exhaust cleaning system so the car fulfills the EPA standards and behaves as advertised?

The vehicles were sold with listed fuel economy numbers.  The car can only reach those numbers with the cleaning device being deactivated.



By the way, I had wondered how this was possible - normally fuel economy and emissions go hand in hand.  More fuel economy also means less emissions.  But I finally saw the explanation, which of course revolves around it being a diesel engine.  The emissions in this case they are worried about are NOx.  There is a filtration system, but in order for it to work it has to be hot.  In order for it to be hot the vehicle has to burn extra fuel to generate that heat.

[Zanza]

Is it actually established that the customers were ever promised the car as it behaves with the exhaust cleaning system being deactivated?

Or was it always advertised as it would behave with the exhaust cleaning system activated?

If it is the latter, is there any actual damage to the individual car owners if VW now flashes the ECM and always activates the exhaust cleaning system so the car fulfills the EPA standards and behaves as advertised?

The vehicles were sold with listed fuel economy numbers.  The car can only reach those numbers with the cleaning device being deactivated.



By the way, I had wondered how this was possible - normally fuel economy and emissions go hand in hand.  More fuel economy also means less emissions.  But I finally saw the explanation, which of course revolves around it being a diesel engine.  The emissions in this case they are worried about are NOx.  There is a filtration system, but in order for it to work it has to be hot.  In order for it to be hot the vehicle has to burn extra fuel to generate that heat.

That doesn't make sense. As you say, the fuel and emissions cycle tests happen under similar conditions. The parameters that were identified so far as controlling whether the exhaust cleaning system will be activated or not would be the same for both cycle tests. I would assume and I haven't read anything else so far, that the car will fulfill the emissions standards and then reach the posted fuel economy. Of course the fuel economy in real driving is never anywhere near that of the cycle tests, but maybe Volkswagen made their customers happy by actually getting closer to the posted fuel economy ratings by deactivating that system in real driving conditions.

There were different NOx cleaning systems paired with the engines apparently. One passive based on some kind of metal that needs to be cleaned (which costs performance) and the other active based on urea addition to the exhaust cleaning system which will also cost performance. Both systems were deactivated by the control unit. Not sure about the hot part. However, to get the most power out of diesel, you need to burn it at very high temperatures, which happens to also be when most NOx is created. So fuel efficiency goes hand in hand with higher NOx generation.

[jimmy olsen]

I don't think anyone is surprised by this news.

http://www.bbc.com/news/business-34345210

Volkswagen has admitted rigging emissions tests in Europe in the same way it falsified results in the US, Germany's transport minister has said.

Alexander Dobrindt said it was not known how many of the 11 million vehicles affected were in Europe.

He also said other manufacturers' vehicles would be checked.

The scandal began unfolding on Friday when the German car giant said it had used software in the US to provide false emission test results.

Mr Dobrindt said he had been told vehicles with 1.6 and 2.0 litre diesel engines are "affected by the manipulations that are being talked about".
 
The company's Jetta, Beetle, Golf and Audi A3 models in the US from 2009 to 2015, and the Passat from 2014-15, were fitted with the devices which produced doctored results. However, diesel cars are far more popular in Europe than in the US.


Mr Dobrindt also said random tests would be conducted on cars made by manufacturers other than VW: "It is clear that the Federal Office for Motor Traffic will not exclusively concentrate on the VW models in question but that it will also carry out random tests on vehicles made by other carmakers."

The value of Volkswagen has shrunk by around 30% since the scandal was revealed.

Separately, BMW shares dropped by 10% on reports the false tests had been used by other carmakers.

The company issued a statement denying the report, saying the "group does not manipulate or rig any emissions tests".

"We observe the legal requirements in each country and adhere to all local testing requirements," it continued.

VW is setting aside €6.5bn (£4.7bn) to cover the costs of the scandal.

The German car giant's chief executive Martin Winterkorn resigned following the revelation.

Mr Winterkorn said he was "shocked" by recent events and was "not aware of any wrongdoing on my part".

The supervisory board said it would announce Mr Winterkorn's successor at a board meeting on Friday.

There has been speculation in German newspapers that Matthias Mueller would be named as the next chief executive. He is head of Porsche, which is part of the Volkswagen group of companies.

German public prosecutors are considering an investigation, with US authorities also said to be planning criminal investigations.

[Admiral Yi]

I would like to have a well renovated T1 or T2,  that's the hippie bus.

Little tiny engine in that thing.  Rode to school growing up in a VW minibus.

[Berkut]

I wonder if this is going to get others to start testing other cars under similar circumstances, and see what other companies are lying about their emissions/performance/efficiency.

[jimmy olsen]

They're boned

http://www.usatoday.com/story/money/cars/2016/03/29/ftc-federal-trade-commission-volkswagen-group-clean-diesel/82376012/

The Federal Trade Commission on Tuesday accused Volkswagen Group of deceiving American consumers into buying emission-spewing diesel vehicles, seeking more than $15 billion in damages in what could be one of the largest false-advertising cases in U.S. history.

The FTC filed a four-count civil complaint against Volkswagen Group in U.S. District Court in California, alleging the company falsely advertised that it was selling new "clean diesel" vehicles that were purchased by about 550,000 buyers.

The lawsuit compounds the German automaker's legal troubles in the U.S., where it is already facing a criminal probe and numerous lawsuits after it admitted that it rigged more than half a million vehicles with software to cheat emissions regulations.

"This was an FTC case waiting to happen because they based their entire advertising campaign on this benefit," said Linda Goldstein, chair of law firm Manatt Phelps & Phillips' advertising, marketing and media practice, in an interview.

The FTC is pursuing "permanent injunctive relief, rescission, restitution, the refund of monies paid, disgorgement of ill-gotten monies, and other equitable relief," according to the lawsuit. Though FTC attorneys did not specify an amount, a person familiar with the case said the government is seeking more than $15 billion in damages.

"For years Volkswagen's ads touted the company's 'clean diesel' cars even though it now appears Volkswagen rigged the cars with devices designed to defeat emissions tests," FTC Chairwoman Edith Ramirez said in a statement. "Our lawsuit seeks compensation for the consumers who bought affected cars based on Volkswagen's deceptive and unfair practices."

Volkswagen TV commercials, print advertisements, press releases, emails and online videos invariably promoted the company's "clean diesel" slogan, claimed that VW diesels had low emissions and describing the cars as "environmentally-conscious," "eco-conscious," or "green," according to the lawsuit.

"It was a very emotionally appealing campaign," Kelley Blue Book analyst Rebecca Lindland said in an interview. "You felt like you were a good human being. It made you feel better about buying a diesel and it also made you feel like you were buying the latest technology."

According to the lawsuit, VW marketers studied potential diesel customers and determined that they "rationalize themselves out of their aspirations and justify buying lesser cars under the guise of being responsible."

The company has already set aside $7 billion to pay for repair costs on the approximately 11 million vehicles globally that are affected by the emissions scandal.  But analysts expect tens of billions of fines and settlements before the episode is complete.

The lawsuit was filed in the court's Northern District of California, which is also handling the consolidated litigation from consumers seeking economic damages over the emissions violations. That could expedite what attorneys describe as a global settlement involving the various claims against Volkswagen, which corporations often prefer over years of uncertain litigation.

"Volkswagen has received the complaint and continues to cooperate with all relevant U.S. regulators, including the Federal Trade Commission," VW said Tuesday in a statement. "Our most important priority is to find a solution to the diesel emissions matter and earn back the trust of our customers and dealers as we build a better company."

Volkswagen diesel cars on models ranging from 2009 through 2015 are emitting harmful pollutants — namely nitrogen oxide, which can exacerbate respiratory conditions such as asthma — at rates of up to 40 times U.S. standards.

In several instances, Volkswagen marketing materials claimed that its diesel vehicles reduced nitrogen oxide emissions by up to 90%, according to the FTC.

Goldstein, the advertising lawyer, said the FTC's "threshold for proving deception is quite low" in cases like this. For example, VW could still be held liable even if the marketers who made the ads didn't know that the vehicles violated federal standards.

In one 2015 online video for VW's "Diesel Old Wives' Tale" series, an "old wife" holds a white scarf to the exhaust of a VW Golf SportWagen TDI and deems it pristine.

"See how clean it is?" the woman asks.

"Volkswagen TDI Clean Diesel: Like really clean diesel," the ad's tagline concluded, according to the FTC.

That video alone was viewed at least 9 million times.

[Martinus]

In 2014 they posted $260 billion revenues. And the fine will probably get reduced in a settlement. They will live.

[Monoriu]

My respect for VW has gone up.  Trying to work around the rules to give better engines to consumers. 

[Martinus]

My respect for VW has gone up.  Trying to work around the rules to give better engines to consumers.

[DGuller]

In 2014 they posted $260 billion revenues. And the fine will probably get reduced in a settlement. They will live.

VW is not Apple, revenues don't quite equal profits.  The margins of automakers are the classic 5% of revenues or thereabouts.

That said, it wouldn't be bad if VW had to dilute the ownership to recapitalize itself to pay the fines.  Two thirds of it are owned by a rather disgusting set of characters.

[Grey Fox]

My respect for VW has gone up.  Trying to work around the rules to give better engines to consumers.

That's a great spin.

[Zanza]

They might try to spin off their commercial vehicles division (VW commercial, Scania, MAN) if they need to sell something to cover the costs.

And while Volkswagen isn't Apple, they have reserves of 20-30 billion Euro, still generate ten billion Euro profit per year and can save on investments and R&D in the short term.