Ripple effect from VW ‘dieselgate’ scandal still being felt

VW subsidiary Porsche fined €535m, while total bill for emissions scandal now €30bn

Ask any executive of an auto company what business they are in and you’re unlikely to hear the word “cars”. Instead you will be told they are now a tech company or focused on “mobility”.

For all the desire to model themselves as the next Apple or Google, the stench of Volkswagen's "dieselgate" scandal still stinks up the the corridors of power at European carmakers. Nearly four years on from the German car giant admitted to fitting cheat devices to 11 million vehicles in order to rig US emissions tests, the fines continue to pile up.

This week its subsidiary, Porsche, was hit with a €535 million fine; so far the total bill for dieselgate has mounted to €30 billion. While these have largely covered official fines and costs, it is not the end of the road for the scandal. Legal proceedings against individuals, including former chief executive Martin Winterkorn, remain open.

Meanwhile, thousands of investors are suing the company for the losses they suffered on its shares when news of the scandal broke, while hundreds of thousands of drivers are also demanding compensation.


More stringent scrutiny of the regulations and operations of the car giants have uncovered further allegations. The European Commission last month told German carmakers they face hefty fines for alleged collusion in the area of emissions filtering technology. It's hardly surprising then that governments have set stringent emissions targets for the auto giants to meet in the coming years; targets the companies say are unfeasible. Unsurprisingly, their pleas are being ignored by politicians who feel they have been duped in the past.

What next for worried carmarkers?

The timing could not be worse for the established car giants. Alongside hefty fines, they need to invest in the development of electric and autonomous vehicles at a pace and level unprecedented in the history of the industry. Where once they worked alongside regulators to set the pace of progress, the timeline is now being dictated by governments. But new rivals are starting to emerge, eager to take advantage of the falling barriers to entry.

It has been a grim first quarter for most of the players in the auto sector. Optimists suggest these are simply the financial pains of transition to the new age of technology. However, the revolution under way in the auto sector may be as seismic as we have witnessed in the technology sector and a few of our current crop of car brands may go the way of Nokia.