2009 Volkswagen Jetta TDI
During times of trouble and strife, we’re often told that things will get worse before they get better.
In the case of Volkswagen’s ongoing Dieselgate fiasco, though, things just seem to keep rocketing downhill with little sign of slowing down, much less reversing course. The latest “clean diesel” news involves yet another lawsuit aimed at the beleaguered German automaker, and an indefinite hold put on the company’s latest earnings report.
1. New Jersey takes Volkswagen to court. Three states — New Mexico, Texas, and West Virginia — have already sued Volkswagen for designing cars to cheat on emissions tests. Now, Jersey has followed suit (pun absolutely intended), insisting that the automaker has “developed and distributed into the marketplace sophisticated software to evade emissions requirements, it misled regulators about the true environmental impact of its vehicles, and it misled consumers about the products that it was marketing as supposedly good for the environment.”
The lawsuit wants Volkswagen to pony up civil penalties for committing consumer fraud and for breaking environmental regulations. New Jersey has also asked the court to compensate VW, Audi, and Porsche owners.
2. Earnings report delayed indefinitely. Volkswagen was expected to issue its annual earnings report on March 10, but the company now says that the release will be postponed. Volkswagen has also pushed back the date of its annual shareholder’s meeting, which was slated for April 21. Neither the report nor the meeting has been rescheduled yet.
Volkswagen says that it believes earnings will be on par with last year. However, the fines, fees, and fixes associated with the Dieselgate recall will likely take a huge bite out of the automaker’s profits.
How big of a bite? The company could pay up to $48 billion in fines to the U.S. government alone — and that sum doesn’t include
- settlements with states like New Jersey;
- settlement of 500+ civil cases that have been wrapped into a massive class-action suit; or,
- the price of repairing and/or buying back 482,000 2.0-liter and 85,000 3.0-liter diesels from Audi, Porsche, and VW registered in the U.S.
Nor does it include the cost of dealing with more than 10 million illegally rigged diesels in other parts of the globe.
All of which helps explain why Volkswagen’s stock has fallen 43 percent in the past 12 months. The tumble began in March of 2015, but picked up speed last September, when news of the Dieselgate scandal first broke.
In other words, the earnings report is probably pretty gloomy, and Volkswagen likely needs more time to find some silver linings.