Volkswagen has found itself in a tight spot after investors wiped another $3.3 billion from the company's value on Wednesday, following the revelation that Volkswagen has understated the fuel intake of some cars.
The carmaker acknowledged that it has underestimated the fuel consumption of some 800,000 cars in Europe, which means those cars were more expensive to drive than what buyers were led to believe. This has added a new element to a crisis that had previously focused a lot on environmental damage.
This scandal could threaten to make a serious rupture in VW's car sales if it continues like this for the rest of the year. It could deter millions of cost-conscious consumers who have come to believe in what the company had to say about fuel cost.
So far, the effects of the scandal have not been a huge problem for VW, but that could change in the coming months due to the fact that VW sales were flat during the best month of automobile sales. The company failed to grow its business at a time when key competitors are forging ahead.
Business Insider also reported that VW sales could contract at around 6 percent or more this year
Everything erupted back in September when United States authorities exposed VW for using "defeat devices" to cheat several critical tests for emissions of nitrogen oxide, something that causes smog. According to VW, such software was installed in over 11 million of its diesel vehicles worldwide.
The scandal has forced CEO Martin Winterkorn to resign from his post. Matthias Mueller quickly stepped in to fill the position at the helm of the company as he sets out to place VW back on the right track going forward.
"From the very start I have pushed hard for the relentless and comprehensive clarification of events," according to Matthias Mueller, Volkswagen's current CEO. "We will stop at nothing and nobody. This is a painful process but it is our only alternative."
The problems VW is facing right now could cost it an additional $2.2 billion. The company has already booked a $7.3 billion charge that is in relation to the diesel engine scandal.
