How Will Emissions Scandal Affect The Future Of VW's Vehicles? The $15 billion price tag for Volkswagen's diesel deception won't put VW out of business but it will greatly hamper the company's position in the global marketplace.
NPR logo

How Will Emissions Scandal Affect The Future Of VW's Vehicles?

  • Download
  • <iframe src="https://www.npr.org/player/embed/485058653/485058654" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript
How Will Emissions Scandal Affect The Future Of VW's Vehicles?

How Will Emissions Scandal Affect The Future Of VW's Vehicles?

How Will Emissions Scandal Affect The Future Of VW's Vehicles?

  • Download
  • <iframe src="https://www.npr.org/player/embed/485058653/485058654" width="100%" height="290" frameborder="0" scrolling="no" title="NPR embedded audio player">
  • Transcript

The $15 billion price tag for Volkswagen's diesel deception won't put VW out of business but it will greatly hamper the company's position in the global marketplace.

DAVID GREENE, HOST:

Volkswagen is facing criminal penalties after the company admitted to cheating on emissions tests and also lying to regulators. The company's already on the line for nearly $15 billion in a legal settlement, and that number could grow. NPR's Sonari Glinton looks at Volkswagen's future.

SONARI GLINTON, BYLINE: It's been a really rough several months for Volkswagen. The company has to make customers whole and repair some of the environmental damage it caused. That's kind of just the beginning. They're likely to face criminal penalties. Karl Brauer is a senior analyst at Kelley Blue Book.

KARL BRAUER: It's going to be a lot to manage. I mean, the company is going to have to manage the process of resolving the issues with their diesel emissions and the time and energy that that's going to take while also looking to the future.

GLINTON: Brauer points out that consumers often have short attention spans when it comes to automotive scandals. But he says, around the globe, VW has won over many markets because it gives customers what they want. Brauer says that's especially true with Volkswagen's new focus on hybrids and electric cars.

BRAUER: People are going to want an electric car, a clean car, a quiet car that still gets good range out of the battery pack and doesn't cost an inordinate amount of cash. And I think Volkswagen is fully capable of putting together a vehicle that meets all of those needs.

ERIK GORDON: VW is not going to be the same because they don't have the money to be the same.

GLINTON: Erik Gordon is a professor at the University of Michigan's Ross School of Business.

GORDON: Car companies live and die on their new models. You have to regularly bring out new, exciting models. This isn't enough money to put a crimp in their development cycle. The VW of old is not the VW of the future.

GLINTON: To give you an idea, it takes about a billion dollars to bring one car from sketch to road. The analysts say that means VW's product lines will likely get old and not as innovative - essentially, less cool.

David Whiston is a market analyst with the firm Morningstar. He covers the auto industry. He says the recent Brexit vote will affect all the European car companies greatly. With VW being the biggest car company in Europe, Winston says it has the most to lose.

DAVID WHISTON: Britain is one of the largest markets for cars in the EU, so if it's more difficult to export cars from Germany into England, that's bad. If the British economy slows and then people at the margin buy fewer cars, then that's bad for Volkswagen.

GLINTON: Even though here in the U.S. Volkswagen is likely to face criminal fines, it's not apparent that other countries have the same appetite. Sean McAlinden is with the Center for Automotive Research.

SEAN MCALINDEN: You try to make an example out of Volkswagen. The thing isn't right. There wasn't 25 or 20 or $15 billion worth of damage done, not even close.

GLINTON: McAlinden says Volkswagen got into this problem - well, in part, because they cheated - but also because regulators were looking to score a big victory. The fight could get uglier and uglier. Gary Hufbauer is with the Peterson Institute for International Economics. He says those directly related to the scandal could see jail time. But he says there's not a lot of appetite in Germany to punish one of its most important companies.

GARY HUFBAUER: Come what may, Germany will finance Volkswagen to survive as a company. It's just as certain as we financed General Motors and Chrysler to survive in the financial crisis.

GLINTON: Hufbauer says European Union rules limit the amount of aid the German government can give to Volkswagen. But he says the car industry is the pride of the German economy with Volkswagen at the very center. Sonari Glinton, NPR News.

Copyright © 2016 NPR. All rights reserved. Visit our website terms of use and permissions pages at www.npr.org for further information.

NPR transcripts are created on a rush deadline by Verb8tm, Inc., an NPR contractor, and produced using a proprietary transcription process developed with NPR. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.