California and the Effect of the Volkswagen Scandal

VW LOGOBeginning in 2007, Volkswagen and affiliated companies such as Porsche and Audi began perpetrating possibly the largest scam on consumers in history. Volkswagen publicly advertised their “clean diesel” technology set a world record for lowest fuel consumption while simultaneously meeting the highest emissions standards. In fact, a computer program designed to detect when the vehicles were being tested so it would run cleaner was placed in virtually every Jetta, Beetle, Audi, Golf, Passat, Toureg, and Porsche Cayenne, stretching in some cases all the way back to 2009 and up to the 2016 models on lots right now. Several top Volkswagen leaders have resigned in disgrace after virtually admitting this was an intentional act. In addition to fraud, these companies are facing civil racketeering and conspiracy charges, and experts believe criminal charges are likely to follow.

Truth in engineering indeed.

The Volkswagen emissions scandal is being felt worldwide by over 11 million owners.  Approximately 482,000 of these vehicles are in the United States. Volkswagen claims nearly 80 percent of the diesel fuel passenger cars in the United States. Most individuals who purchased these vehicles did so primarily because they supposedly offered higher fuel efficiency while meeting environmental safety standards. It turns out, the vehicles did neither of these things.

Both owners and dealers alike are feeling the effects as the investigation sheds light on just how much of an impact this will have. Volkswagen faces loss of credibility, consumer trust, a sales drop of 9% so far this quarter over last year, and a slew of fines from UK to California.  The Environmental Protection Agency (EPA) estimates that VW could face up to $18 million in penalties for the 482,000 vehicles in the US alone.1

It is unknown how many of those vehicles are in California, but what is known is that the backlash will be the greatest from owners within California. Purchases in California are often based on environmental impact. The government regulations have been considerably higher in California until recently, when all states adopted the same standards as California for emission tests. Many may have the ability to file claims based on the state laws, in addition to the federal laws.

The jig was up for Volkswagen after private research showed that the vehicles actually emitted much higher toxic fumes than would pass state and now federal standards, and the gas mileage was much lower than advertised. But Volkswagen still didn’t fess up until the EPA threatened to withhold approval for the 2016 models unless Volkswagen could provide assurance that the problem being seen in the 2009 to 2015 models wouldn’t show back up again in the new models. It was only then, in September 2015, that Volkswagen admitted an intentional testing defeat device had been placed in millions of cars worldwide. Since then, it seems every new day brings a new model to the list of affected vehicles.

Volkswagen admitted its vehicles could detect when the vehicle was being tested in a simulation environment versus when it was actually driving. This would trigger the software to reduce the emissions during testing. In fact, the emissions from the VW diesel models were emitting 40 times the amount of toxic fumes that what is permitted.

According to the EPA, who is issued one Notices of Violation on September 18 and second  Notice of Violation on November 2, states that 5 companies falling under Volkswagen (Volkswagen AG, Audi AG, Volkswagen Group of America, Inc. , Porsche AG and Porsche Cars North America) are all in violation of the (CAA) Clean Air Act. Within the second notice, Cynthia Giles, Assistant Administrator for the office for EPA’s Enforcement and Compliance Assurance, says, “VW has once again failed its obligation to comply with the law that protects clean air for all Americans. All companies should be playing by the same rules. EPA, with our state, and federal partners, will continue to investigate these serious matters, to secure the benefits of the Clean Air Act, ensure a level playing field for responsible businesses, and to ensure consumers get the environmental performance they expect.”

So what does this mean for California Volkswagen owners and Dealers? California laws for emissions are among the highest in the world. Volkswagen must have been aware of California’s high standards; their largest testing facility is located in Oxnard, California. While individual investigations are being done by many states and countries around the world, California has chosen to pursue its own investigation based on its much more aggressive laws. The outcome of these investigations are still unknown, so the ramifications to both individuals and dealers is also unclear.

Volkswagen, knowing it is on the verge of serious financial backlash from all of the aforementioned entities, is quick to save face and silence its vehicle owners in the US, offering a $500.00 gift card, another $500 credit towards repairs and a 3 year free road side assistance hoping that this will show goodwill towards its customers. Volkswagen has assured consumers that accepting this offer will not waive any rights to seek additional compensation through litigation, but the safest route is to speak to an attorney before you accept any offer from Volkswagen. You should also know that the gift cards contain their own arbitration clauses, which may affect your rights down the road.

Volkswagen had not only defrauded its loyal consumers, causing a lack of trust VW but also in the industry as a whole. It deceived its dealers who sold their vehicles believing they were providing an honest service and reputable vehicle. Now, dealers are left with a lot full of vehicles that are virtually unsellable, even if the vehicles don’t fall under the effected vehicle list. The brand reputation and credibility has plummeted, creating a lack of interest in the brands as whole. Dealerships are waiting in limbo for the full investigations to be concluded to understand how their inventory and future sales will be effected, leaving them in a sales purgatory.

Consumer’s vehicles have undoubtedly lost considerable value, 20% within the first week of the scandal, making the possible resale of the vehicle questionable. While Volkswagen did submit its first plan to fix the vehicles, it is not clear if it will be accepted, or what the cost or effect of that fix will be. It is estimated that it could cost up to $8,000 per vehicle to repair based on how other clean diesel vehicles work. Modifying the vehicle to meet the requirements could potentially leave the vehicle with less passenger room or even without space for your spare tire. The potential degradation of the vehicle is endless at this point. But the damages don’t end there. In some states, including California, Volkswagen could be facing punitive damages fair in excess of purchase price of the vehicle. This is to say nothing of the less tangible but still very real harm done to the environment by this fraud.

The fumes that have been and are continuing to be emitted by Diesel vehicles are a major health concern.  The short term and long term effects of NOx can be detrimental. Short term effects can range from inflammation of the airways to difficulty breathing, while long term effects can be even more sever and permanent. This includes damage to lung tissue and reduction in lung function, aggravating existing conditions such as heart disease, emphysema, bronchitis, all which can eventually lead to death in high risk patience such as children, people with asthma, and the elderly.

Dealers and owners of Volkswagen should consider seeking an experience attorney that will utilize their knowledge and resources to get you the compensation for the intentional deception, the cost of your time, and loss of money and value in your vehicle.

If you have been effected by the Volkswagen scandal call Potter Handy, LLP at 800- 383-7027 or Send Us Mail. For a list of vehicles effected click here.










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