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What is the Volkswagen scandal and why should you care?

If you’ve been paying any attention to automotive news this year, you will know about the Volkswagen emissions scandal. Numerous news outlets have been reporting on the case, which involves millions of cars the world over – both diesel and petrol – and has not only caused former CEO and chair of Audi Martin Winterkorn to step down, but the company to report a loss for the first time in years.

We’ll get to the specifics of the story in a moment, and why you should pay attention, but first let’s put the whole thing into perspective.

Things to know about Volkswagen

Volkswagen is not just its own marque, it encompasses 12 different brands from seven countries within Europe, making it one of the continent’s leading automotive manufacturers. These additional brands include Skoda, Audi, Bentley, Porsche and Lamborghini, to name just a few. Due to its size, the company reports it makes about 25 per cent of all new cars in Europe!

In monetary terms, Volkswagen turned over just under €100 billion in the 2014 financial year, according to statistics database Statista, which equates to over AU$140 billion.

The scandal in summary

The following is a summary of what actually happened, and some of the ramifications of those events.

The US Environmental Protection Agency (EPA) released a statement on September 18, 2015 detailing how it had found violations of the Clean Air Act in Volkswagen diesel cars, and alleged that the group was using software to circumvent testing situations.

According to the BBC, the company itself later admitted to this.

What was happening was that ‘defeat devices’ were installed in some diesel cars that detected when the vehicle was in a testing environment, and produced less carbon emissions. When the exam was over, it went back to normal – which meant each car with the device produced far more gases than anyone realised.

This began an investigation within Volkswagen, and significant public outcry. The BBC also reported that the software affected 11 million diesel cars worldwide. But that’s not where it ended.

At the beginning of November, the manufacturer said it was recalling upward of 800,000 additional vehicles – 98,000 of which were petrol engines, states the Wall Street Journal (WSJ). This was the first time non-diesel cars had been mentioned in the debacle.

The result of this has been huge. Volkswagen shares fell and, as we mentioned, the group went into loss for the first time in 15 years.

How has this affected Australia specifically?

The bulk of the information coming to light is taking place in the United States and Europe, so just how has the fallout affected us in Australia?

Our carbon emission laws are looser, and regulations in Australia allow slightly higher outputs. However, News Corp Australia states that some of the emissions of Volkswagen Group vehicles could be up to 35 times more than expected, meaning there are cars in Australia that very likely have the software installed.

Though Reuters reports that initial assessments put local figures at around 77,000 cars, this number rose to more than 90,000 in October, including Volkswagen, Audi, Skoda and some commercial vehicles.

According to Volkswagen, the following cars could be affected:

•    Volkswagen Golf
•    Golf Wagon
•    Passat
•    Tiguan
•    CC
•    Jetta
•    Eos
•    Amarok
•    Caddy
•    Skoda Octavia
•    Yeti
•    Superb
•    Audis installed with either a 1.6 TDI or 2.0 TDI engine

All cars would have been built sometime between 2003 until now. You can either ring Volkswagen or the relevant sub-brand if you want to know whether your specific vehicle is affected.

Class-action lawsuit

Many have signed on to a class-action lawsuit against the manufacturer. Headed by firm Maurice Blackburn (MB), the court case arose due to what it perceived as Volkswagen’s lack of clarity on how it intends to offer consumers compensation and sensible next steps.

The case has so far brought in over 10,000 registrants from around the country.

“Our aim is to quickly and efficiently get a fair outcome for the wrongs that have been suffered to them,” said lead MB lawyer Jason Geisker to the WSJ.

Why should you care about all of this?

And now the ultimate question. Why should the average Australian car owner care about the Volkswagen scandal?

For starters, as a Volkswagen, Audi or Skoda owner, you may be financially impacted by owning one of the at-fault vehicles. MB believes that these defeat devices could cause a huge loss of resale value, not to mention increased running costs in the short term. On top of that, even if the device is removed in a recall action, you will still be left with the same car – only now its true carbon emissions will be visible on tests.

Also, the over 90,000 motorists who purchased one of these vehicles have paid the price for a more environmentally friendly car. Remember, the actual emissions could be up to 35 times higher than first thought. So though perhaps not all of the Volkswagen, Skoda and Audi owners will have wanted a low-carbon car, the ones that did have essentially been tricked. Rather than helping reduce Australia’s considerable carbon emissions figures, these cars are contributing more to the problem.

For all of you who don’t own an affected vehicle, this is still an important issue. Can you really trust the motoring industry if it has been proven that some companies cheat tests? What will you base your next car purchase on if you don’t truly believe the figures?

And remember, whether you drive an affected vehicle or not, you still need compulsory third-party insurance – also known as a green slip. Use our online green slip calculator if you want to find the best price for your vehicle.

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Stephen Treacey

CEO and Founder, greenslips.com.au

Stephen is the founder and owner of greenslips.com.au. He was one of the first to recognise the benefits of the internet as a way to present CTP greenslip pricing and information. greenslips.com.au is still regarded as the innovator and authority in the space. Read more about Stephen

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