Australia

What is the Volkswagen 'Dieselgate' emissions scandal?

0:00

The scandal has cost Volkswagen $30 billion in fines, settlements and remediation, making it the biggest business crisis in its 80-year history.

What is Dieselgate?

In 2015, the United States Environmental Protection Agency (EPA) found that Volkswagen had fitted cars with "defeat devices" - software that could detect test conditions and cut its emissions accordingly to improve results.

The technology allowed cars to emit up to 40 times the permissible levels of harmful nitrogen oxide during driving.

Volkswagen since admitted that about 11 million cars worldwide were fitted with the "defeat device". This included eight million cars in Europe and 600,000 in the US.

A study published in May found that excess nitrogen oxide from improperly configured diesel vehicles had contributed to about 38,000 premature deaths worldwide in 2015.

0:00
Australian joint class action against VW and sister companies Audi and Skoda open in Sydney
Australian joint class action against VW and sister companies Audi and Skoda open in Sydney

What was the fallout?

The scandal has so far reportedly cost the auto giant as much as $30 billion in fines, settlements and remediation, making it by far the biggest business crisis in its 80-year history.

"We've totally screwed up," then-VW America boss Michael Horn said when the scandal broke.

US prosecutors went on to accuse former Volkswagen executive Oliver Schmidt in participating in "one of the largest corporate fraud schemes in American history".

Schmidt was sentenced to seven years in prison in December 2017 and ordered to pay a $400,000 fine for concealing software used to evade pollution limits. He was charged with conspiring to commit fraud and violating the US Clean Air Act. 

Oliver Schmidt was jailed for seven years for Volkswagen emissions scam.
Oliver Schmidt was jailed for seven years for Volkswagen emissions scam.
AAP

Several other current and former VW executives have been charged by US prosecutors, while several investigations into the emissions fraud are ongoing in Germany and around the world.

And more heads may roll. German newspaper Bild am Sonntag has reported that "dozens, if not hundreds of employees were aware of the emissions fraud".

Some 52 per cent of Germans said they had "lost confidence" in their auto industry in a recent poll, while 73 per cent said politicians had treated the sector too leniently.

How many Australian drivers were affected? 

A class action against car giant Volkswagen over Dieselgate started in Sydney's Federal Court on Monday.

The estimated two-week trial was launched by law firm Maurice Blackburn on behalf of about 100,000 affected motorists.

"VW happily profited for many years off the back of their 'eco-friendly' diesel deception yet, ever since the truth was finally exposed, they have refused to fess up here and take responsibility for people's losses," lawyer Jason Geisker said in a statement.

VW driver and owner Alister Dalton - the lead plaintiff in the case - said: "the way they've tricked us and the way they've treated us since this came to light has been beyond bad, it is the worst customer relations management one could imagine".

How is business at Volkswagen now? 

In the wake of the diesel scandal, VW promised deep reforms across its sprawling 12-brand empire, which ranges from Lamborghini, Audi and Porsche to Skoda, Seat and its own branded cars.

And there are positive signs.

The company appears back in racing form, as its 2017 results went back to levels not seen since before Dieselgate. 

VW said in a statement it had booked a $14 billion bottom line last year, more than double its earnings in 2016.

The last time the auto giant achieved a result close to that was in 2014.

This was on the back of record annual sales of some 10.74 million vehicles worldwide.

Additional reporting: AFP, Reuters

Stay up to date with SBS NEWS

  • App
  • Subscribe
  • Follow
  • Listen
  • Watch