Germany Pounds on the Horn

Michael Horn, President and CEO of Volkswagen America, reacts to being mobbed by the media after he apologized for the Volkswagen diesel scandal at the LA Auto Show in Los Angeles
Photograph by Lucy Nicholson for Reuters

It appears the finger pointing at Volkswagen is only going to get nastier. Six months after the now-infamous diesel scandal broke, Volkswagen of America CEO Michael Horn has stepped down from his post. His departure comes amid mounting pressure from VW world headquarters in Wolfsburg, Germany, and stalled talks with the EPA on a fix for the emissions issue, which the company estimates will impact upwards of 600,000 vehicles worldwide.

The news sent shock waves through VWoA’s dealer community, which responded with outrage at the “mutual agreement” between the well-respected former CEO and German headquarters. Applauding the progress Horn has made since he took the reins in 2014, VW’s National Dealer Advisory Council labeled the decision yet another sign of “continued mismanagement” at the corporate helm and expressed serious concern about the change in leadership.

“This change in management can only serve to put the company at more risk, not less,” the dealer council said in a statement.

Here Comes the Dealer Backlash

Not surprisingly, US dealers have begun to revolt in the wIMG_3275ake of this sad new twist in the saga and the “culture of mistrust” it continues to perpetuate. VWoA’s national dealer council president, Alan Brown, says dealers have invested over $1 billion in showroom upgrades for the automaker and feel betrayed by its mishandling of the scandal.

“I’m telling you that the dealer network is becoming very, very, very frustrated very quickly,” Brown told USA Today.

And Now, the Justice Department

So Horn isn’t the only one taking a pounding, nor is headquarters the only office inflicting it. Two days ago, in another discouraging turn of events, the Wall Street Journal and Reuters reported the US Justice Department had issued subpoenas targeting VWoA for bank fraud. The investigation falls under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), a civil law enacted in 1989 to extend the statute of limitations on financial fraud cases to 10 years.

These new allegations, according to WSJ, center around the question of whether lenders have “suffered damages from financing Volkswagen vehicles at an inflated price” since as far back as 2007. A similar claim on behalf of consumers may be close behind.

The case stands to only accelerate trouble for VW, which already faces fines of nearly $50 billion for violating the Clean Air Act. Unlike criminal cases, civil cases filed under FIRREA carry a lower burden of proof. In such cases, the “beyond a reasonable doubt” rule doesn’t apply. The Justice Department merely needs to prove the allegations are “more likely than not” true.

And Finally, My Own True Confessions

Does any of this really surprise you? I didn’t think so. In which case, this probably won’t either: Two weeks ago, my husband and I bought a Passat TDI sedan. A used Passat TDI sedan. And yes, it’s on THE LIST. And yes, we bought it because it was prime time to buy a used TDI. The original owner’s loss was our gain.


Wish I could say the same about the Golf TDI I bought brand-new three years ago. Like the owners in the upcoming consumer case, I paid a premium for it. But it was the car I wanted from a brand I’ve always loved – and still do. I also love the 42 mpg I’m getting on the highway and the crazy low prices I’m paying for diesel at the pump.

And so, with spring in the air and summer trips in our plans, we’ll continue to enjoy our fuel-efficient feats of German engineering (and software rigging) and try not to think too much about what we’re doing to the environment. (Pickup trucks, after all, are doing equal or worse damage, and sales have never been better.)

Instead, we’ll keep our faith that a fix will be found, the finger pointing will stop and truth and justice will prevail, leaving yet another beloved brand to the business of rebuilding trust and market share.


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