The good, the bad and the Polo
2 minute read | September 6, 2016
Emissions scandal
Translated as the people’s automobile in its homeland of Germany, VW is one of the largest automakers in the world. From its iconic Beetle to the chavtastic Golf, VW has worked hard to establish itself as a household name since its inception in the 1930s.
A brand built on the reputation of reliability, trust and environmental credentials, VW carved its niche among a crowded marketplace. When the World Health Organisation declared emissions from diesel engines to be carcinogenic in 2012, VW found themselves knowingly marketing vehicles found to be emitting 40 times the legally sanctioned limit.
Fitting their vehicles with a “defeat device” that restricted emissions during testing on diesel engines, VW later admitted to cheating emission tests to pass safety standards. VW confirmed that at least 11 million vehicles had been fitted with the device, with at least eight million of those vehicles being located in Europe.
While VW has agreed to fix the affected cars, it now faces a £30bn lawsuit and has suffered lasting damage to its brand.
Supplier fallout
Recent fallouts with CarTrim, which manufactures seats, and ES Automobilguss, which produces cast iron parts used in gearboxes, has halted production on the Passat and Golf in six production plants affecting 27,000 staff.
The manufacturers have demanded compensation from VW for lost income after the car giant cancelled their €500m contract early. CarTrim is demanding €50m over the “late and groundless cancellation of the contract”.
Shares in the company fell to a two-week low of €119.90 as analysts warned the fallout could cost as much as €100m a week. Add that to the £30bn lawsuit, €50m in compensation and decline in sales and VW are looking less like the people’s champ and more like Ivan Drago.
What next for VW?
It would be in VW’s best interest to clear this situation up as quickly as possible. €50m in compensation is half of what they are expecting to lose per week if the delays continue.
VW should also learn from this by having more than one manufacturer supply a part, thereby giving them options should there ever be an issue in future.
We recently reviewed the VW Polo 1.2TSI R Line and found it to be a well-built car with a fit and finish you would expect from a premium brand. The performance surpassed our expectations, so it’s a shame that VW can’t seem to get past their recent troubles, because when it comes to cars, they obviously know their stuff.
Back to resources