The Volkswagen Group has long harboured high hopes for its sales in the USA, but matching them has proven more challenging than the manufacturer might have wished.
In 2007, it boldly announced that it expected to attain group-wide US sales of 1 million cars per year by 2018, in line with a plan to sell an annual 10m vehicles worldwide by the same year.
For a few years, the plan appeared to be on course, with market-specific models gaining ground against the likes of Toyota, but in recent years the growth has stalled.
This is especially difficult because it affects VW’s diesel engines. The company has done a great deal of work to boost sales of oil burners in the USA, branding its cars as ‘Clean Diesel’ and trying to break down deep-held beliefs among American consumers that diesels are excessively dirty.
All that work and investment have been rendered void with the EPA's revelation.
What would lead a division of one of the world’s leading car companies to consider such action? Perhaps it felt under increasing pressure to live up to the grand growth proclamations made by its chiefs in 2007.
Perhaps it’s also an indication of how difficult it is for car makers to adhere to ever-more stringent emissions regulations with standard, non-hybrid powertrains.
Winterkorn’s statement in response to the EPA’s claims is contrite, and with good reason, for this scandal also risks affecting Volkswagen's global reputation, robbing it of consumer trust. As I write this, the firm's share price on the Frankfurt stock exchange has plunged.
Recovery will be a painful process that its rivals – including Toyota with its involvement in Takata’s defective airbag recall and General Motors with its faulty ignition switch scandal – know all too well.
The EPA is talking about hefty fines on Volkswagen. However, while any financial penalties will be hard to swallow, as will the attendant losses in terms of car recalls and sales, it is the loss of confidence from consumers that will hit it hardest, and for longest.
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