Can Volkswagen Weather The Diesel Storm?

When the Environmental Protection Agency revealed that Volkswagen VLKAY installed software on its diesel vehicles designed to cheat emissions tests, many began to discuss whether or not this scandal has the potential to put the world's largest automaker out of business. While other companies like General Motors GM and Toyota Motor Corp T have emerged from debilitating scandals for misleading regulators and consumers in recent years, some say that the scope of Volkswagen's emissions issue may be too great to escape. However, others believe that the media coverage has painted a worst-case scenario for the German automaker and that the company will be able to make the necessary changes to regain public trust. Criminal Case The US Justice Department has threatened criminal charges against Volkswagen in the US, but some say such a scenario is unlikely due to current US legislation. In 1970, car companies were able to secure a loophole in the Clean Air Act that keeps them from facing environmental crime charges. That means that Volkswagen won't be prosecuted for violating environmental laws, so any criminal case brought against the company would have to be for another crime, like lying to regulators. Sky-High Penalties Instead, Volkswagen will likely face exorbitant penalties for violating US environmental standards. As it stands, the EPA has the potential to demand over $18 billion worth of civil fines from the car maker, but most expect the final amount will be much less than that. While the EPA likely won't leverage the $37,500 per car maximum penalty, many are expecting to see the figure exceed any Clean Air Act penalties doled out thus far. Irreparable Damage? While some say Volkswagen may not be able to come back from this scandal, others point to the company's swift action plan under new CEO Matthias Muller as a positive sign. Muller, who promised to get to the bottom of the emissions software problem and hold those responsible for it accountable for their actions as soon as he took control of the company, has already announced an action plan to refit affected cars with updated software. The company is expected to submit its plans to regulators in October and set up a website to keep customers affected by the problem informed in the interim. Muller has also set to work reforming the company's corporate culture, saying that it was important to him to regain lost confidence and ensure deception like this won't happen again.