VW Diesel Emissions Scandal: What You Need to Know

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Senior Pricing Analyst

Alex Bernstein is the Senior Pricing Analyst for CarsDirect.com. Each month he studies immense volumes of pricing and incentives data in search of trends that are useful to car shoppers. In the process, he often breaks industry news stories -- his analyses and insights have been featured on websites such as Automotive News, The Detroit News, Autoblog, The Truth About Cars and The Car Connection.

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, Senior Pricing Analyst - September 22, 2015

Volkswagen has been dominating headlines following allegations by the EPA of deceptive tactics in the emissions of some of its best-selling diesel models. The developing scandal has stunned consumers and industry followers alike, flying in the face of the much-touted "clean diesel" technology. So how did this happen and what does this mean for shoppers and owners? Here's what you need to know.

What happened

Last Friday, the EPA issued a notice to Volkswagen alleging the automaker purposefully installed software in certain diesel models designed to provide false emissions testing results. The use of such a device violates the Clean Air Act and affects the ability of the automaker to obtain a Certificate of Compliance necessary to sell the vehicles.

In real-world conditions, the affected vehicles were found to produce up to 40 times the allowed limit of nitrogen oxide. The substance plays a role in the production of ozone, which has been attributed to health problems such as chest pain, emphysema and asthma.

As a result, Volkswagen ordered its dealers to stop selling affected 2015 models and has delayed selling nearly all of its 2016 diesels until a solution is identified that meets regulations.

Volkswagen will be issuing a recall for affected vehicles once a fix is identified. The EPA has thus far not issued a recall of its own, though it has the authority to do so.

What models are affected?

The EPA has called into question approximately 482,000 vehicles sold in the United States that feature the automaker's 2.0-liter "EA 189" diesel engine. However, Volkswagen says as many as 11 million vehicles are affected worldwide.

The models affected in the United States thus far include the following: 2009-2015 Jetta Sedan, 2009-2014 Jetta SportWagen, 2012-2015 Beetle Coupe and Convertible, 2010-2015 Golf, 2015 Golf SportWagen, 2012-2015 Passat and 2010-2015 Audi A3.

The Volkswagen Touareg TDI has not been called out since it uses a larger 3.0-liter diesel.

What this means if you're a shopper or current owner

Shoppers in the market to buy an affected model will need to wait until the stop-sale order is lifted. Unfortunately, this could take time since Volkswagen has yet to identify a solution.

Gas-powered 2015 models remain unaffected and are still available for sale with substantial year-end offers. Gas versions of the 2016 Beetle, Golf, Golf SportWagen, and Jetta have started arriving on dealer lots and are available for sale.

Current owners have been advised by the EPA that the cars are still safe and legal to drive. However, Volkswagen will likely reach out with recall information.

It's currently unclear what the potential performance impacts of stricter emissions might be on existing models. Conventional logic has been that looser restrictions are generally conducive to increased performance.

Will corrected models drive as well and have the same acceleration? That remains to be seen, but it has the potential to influence the appeal of the cars as well as their resale value. The precise effects will not be known for some time and will largely depend on the solution offered by Volkswagen.

Learn more about how the recall is affecting Volkswagen car buyers>>

What does this mean for Volkswagen?

Volkswagen will likely endure a heavy setback in its efforts to improve its reputation for quality and its status as the world's largest automaker. Potential fines could amount to billions, and the automaker has already set aside $7.3 billion to address the issue.

The affected diesel models have been subject to substantial marketing surrounding claims of the automaker's "clean diesel" technology. Volkswagen's diesels account for as much as 25% of its U.S. sales by some estimates.

The impacts will be severe and long-lasting even after a solution is put forth. Investors are already in a panic, causing the company to lose over $17 billion on Monday, or 19% of its value.

In addition, Bloomberg News reported that the U.S. Justice Department has launched a criminal probe into the alleged misconduct. The impacts of this could be far-reaching.

, Senior Pricing Analyst

Alex Bernstein is the Senior Pricing Analyst for CarsDirect.com. Each month he studies immense volumes of pricing and incentives data in search of trends that are useful to car shoppers. In the process, he often breaks industry news stories -- his analyses and insights have been featured on websites such as Automotive News, The Detroit News, Autoblog, The Truth About Cars and The Car Connection.

Follow On: Google+ | Website