When Germany's most respected car manufacturer says it installed software in its diesel cars to beat pollution tests in the US, the first reaction is shock. The second one is, how could they be so stupid? The company in question is Volkswagen and the $7.3 billion embarrassment it now faces is just the tip of the proverbial iceberg. The company's shares took a huge hit and lost 19 per cent of their value on Monday on fears that VW could face another $18 billion in fines.
This not a case of a defective part in diesel cars. This is clearly a case of deception where VW installed software that would switch the engine to optimum levels while undergoing a pollution test and then go back to a more powerful setting thus generating 40 times more pollution. No company ought to get away with something like this and VW will now ponder on who gave the clearance for such a devious and disastrous policy.
The sucker punch for customers was that they were paying more for the car on the assurance that it was a green model. VW has ordered an internal inquiry and there are assurances that those behind this decision will be brought to book. However, it is not as though everything is broken. VW will claw back because its reputation for building good, robust and reliable cars is still intact. But it will be a painful and expensive climb out of the hole.
