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Volkswagen Affaire Shakes the Automotive World

November 13, 2015
Volkswagen Affaire Shakes the Automotive World

The discovery of fraud affecting millions of Volkswagen vehicle purchasers shook the business and economic world, and even affected international politics. Volkswagen, which had surpassed Toyota as the leading vehicle manufacturer in the world, confirmed it had installed an application on 11 million diesel vehicles in order to circumvent pollution control standards. Volkswagen has been sued in various countries, leading to many new litigation cases against the otherwise prestigious German brand. This has caused numerous repercussions in the automotive world. Volkswagen will cut its budget by 1.1 billion dollars and will accelerate its production of electric vehicles. The scandal has also led the Company to implement a cost reduction program, and it has announced it will install only the highest technology environmental components in its diesel vehicles. In addition to a potential loss of prestige among consumers, Volkswagen’s stock fell approximately 50% in the weeks following the automotive news that was heard around the world. Some business analysts have estimated that Volkswagen will be required to reimburse up to 35 billion euros for vehicle repairs, fines and other associated costs. All of this notwithstanding, Volkswagen is a solid company that has exhibited confidence it will be able to recuperate.

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