German automaker Volkswagen Group is under scrutiny after it was found by the U.S Clean Air Group that some of its cars did not pass the standard emission test. The test conducted by Peter Mock and John German revealed another scandal - the use of "defeat device" software in its cars.
The Volkswagen emission scandal involved over 482, 000 diesel cars including Jetta, Beetle, Golf and Audi A3 that were sold based on this fault in the U.S. from 2008 to 2005 according to the Telegraph.
However, USA Today reported that Volkswagen admitted of having installed the software in 11 million cars worldwide. All the cars sold by the company were installed with a "defeat device" that detect when the car was subjected to a test and it will reduce its emission. However when the cars are on the road, the emission releases are higher than permitted by the U.S regulation.
The company, which is also the largest car manufacturer in Europe is facing up to $18 billion in fine by the U.S authority. The fine was estimated based on Environmental Protection Agency (EPA) rules that stipulate a maximum fine of $37,000 per car. The scandal hits the company hard as its share had plunged more than 30 percent to three-year low after the news broke out.
Volkswagen has almost 600, 000 workers worldwide and almost 260, 000 workers in Germany alone as reported by the CNN. The Volkswagen case might saw a decline in its car sale and if the effect prolongs, it could hurt Germany GDP. With $411 billion worth of domestic and export sales, the automotive industry contributes to 2.7 percent of the country GDP.
Chief Economist at the Center for Automotive Research Sean McAlinden said that the nature of the scandal did not jeopardize car users, making it less vulnerable. Even General Motor and Toyota previous cases also saw the company still is surviving today.
70 percent of the company's car sale come from the overseas sale with China as among the biggest customer. McAlinden said that Volkswagen cars sale in the U.S is already declining and the news will not hurt much of its sale.
Besides U.S, other Asian and European country also had started their investigation regarding the problem. The U.S Justice Department is launching a criminal investigation as it fears that the problem is widespread among other car manufacturers.
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