Yours truly was recently interviewed by RT-TV on the Volkswagen emissions scandal, where the biggest car company has been systematically cheating on its emissions for 11 million diesel cars. In the short interview transcript, I address the likely consequences going forward. (The interview was conducted Sept. 24, 2015). (For more of my TV interviews in video, go to my website, http://www.kyklosproductions.com, and the video tab).
“The emissions scandal involving the German automaker is an opportunity for governments to cash in on environmental law, said economist Dr. Jack Rasmus. Many countries are going to go after Volkswagen in order to protect their auto industry, he added.
The head of Volkswagen Martin Winterkorn resigned over a vehicle emissions scandal on Wednesday. The US Environmental Protection Agency found the German company had been rigging emissions tests. The world’s largest car maker could face fines of up to $18 billion.
RT: Volkswagen will be paying billions of dollars in fines, but where will all that money end up?
Dr. JR: Well, this whole scandal is the equivalent of Volkswagen’s Deepwater Horizon crisis. Remember British Petroleum [BP] was fined billions of dollars as the result of the oil spill in the Gulf. But this is going to be even bigger: up to $18 billion just on 500,000 cars in the US where Volkswagen has admitted the problem affects 11 million of its cars worldwide. So this is going to be an even bigger billion dollar event in costs to the auto company. It will spill over to other auto companies as well. We’re going to have the equivalent of bank stress tests now globally on all diesel vehicles. It is really a hard hit to the auto industry as it peaks now – its sales are peaking worldwide. So it is a major crisis and especially for Germany economically. .
RT: If the crisis does spread to other car manufacturers, presumably we’ll be talking about similar sums of money. Is this really about protecting the environment and people, or is it really a great opportunity for governments to cash in?
Dr. JR: It is a little bit of both. Already California, New York, and other states in the US with environmental protection plans are jumping in and suing Volkswagen. You are going to see class actions suits by consumers and law firms in which they are probably going to ask for something similar to what happened in South Korea. In other words – repay the consumers in the former debit cards, because now the value of their vehicle has dropped virtually to half probably of what it is in resale value. It is going to spread throughout the US, and I believe it will spread elsewhere, [to] South Korea. You can expect China to protect its auto industry by going after Volkswagen and others.
The second largest sales for Volkswagen are in China – about the same size as the US sales. So yes, they are cashing in, no doubt in these cases. But there is a consumer problem here as well. They have been very deceitful. And there is a long history of that with auto companies.
RT: What is the future for Volkswagen on the US market? Is the company in danger?
Dr. JR: I think so. Its stock has already fallen 40 percent… and it is going to drag out over a number of years, but it is going to be a big hit to Volkswagen and a hit to the German economy – 17 per cent of all the exports of the German economy are auto exports. So this is already being reflected in Germany as export numbers and in its stock prices, and so forth.
Dr. Jack Rasmus @drjackrasmus
Jack Rasmus 
Leave a Reply