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VW, Audi Face Big Backlash In U.S.

VW, Audi Face Big Backlash In U.S.

“This is a serious violation of the law. Volkswagen was ripping off the consumer and hurting the environment at the same time”

Volkswagen and Audi faced a huge crisis on September 21, and an expensive backlash to its business in the U.S. after the EPA charged it with falsifying data to make its diesel engines look good.

VW has yet to respond fully to the charges, but investors in Europe’s biggest car manufacturer, may be nervously harking back to the unintended acceleration scandal in the 1980s involving Audi, which slammed its business into reverse for years. VW owns Audi.

Already, the U.S. Consumers Union has accused VW of ripping off buyers.

“This is a serious violation of the law. Volkswagen was ripping off the consumer and hurting the environment at the same time,” said Ellen Bloom, senior director of federal policy for the Consumers Union.

“The carmaker was apparently installing software in vehicles that effectively let them generate more pollution than advertised. It’s outrageous. We applaud the EPA and California for cracking down on Volkswagen. These actions send a powerful message that if a carmaker uses technology to get around the rules, regulators are going to come down hard on you breaking the law,” Bloom said.

And Bernstein Research has been trying to find out just how bad this will be for VW. Bernstein analyst Max Warburton, in a published report, said VW faces profoundly serious consequences.

“The accusastion is that VW deliberately sert out to mislead regulators with as cleverly hidden piee of software. There is no way to spin this – this is really serious.

“The best case for VW is probably still a multi-billion dollar fine – the potential $18 billion reported may prove excessive – but a large penaslty looks likely – pariah status in the U.S. with governemtn and possibly consumers, damage to its leading position in diesel in the U.S. and a slower path to improvement in its far-from-perfect-North American business,” Warburton said.

“The reality is VW will recover form this and will remain in the U.S.. The air may have been polluted but no one is know to have died. It will have consequences for the broader asuto industry – expect Raslph Nader typoe cries about the whole damn industry being untrustworthy. Nice on VW,” Warburton said.

Warburton contacted an unnamed emissions expert to find out more details. Could this have been an innocent mistake? Possible, but unlikely. Could other German manufacturers be involved in the scam? Hard to say, but expect an intense investigation.

This will cost VW big. It will have to wasrrasnty affected vehicles for a very long time. VW will have to offer compensastion to owners for expected loss in fuel economy, and maybe market value. There will be many lawsuits seeking to get in on the qction which will becobmined tin a class action. The future of diesels in the U.S. will be hamred, but it is still a small segment.

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