Volkswagen Emissions Scandal: California Authorities Preparing 'Major' Enforcement Action Against Automaker

Authorities in California are preparing a significant enforcement action against automaker Volkswagen, which is reeling from revelations that it used software to skirt emissions regulations in millions of its vehicles. The company is also facing the prospect of multiple lawsuits, in the U.S. and overseas, from customers who feel they were misled about their vehicles, as well as from dealerships.

Mary Nichols, chair of the California Air Resources Board, told Reuters it was too soon to say what penalties would be levied against the company, but that state officials would supervise a recall of affected vehicles. Stanley Young, spokesman for the board, told the news agency:

"Our top priority is to make sure these cars are in compliance."

Volkswagen has admitted that 11 million vehicles worldwide are likely to be affected by the scandal, which saw software installed in vehicles that detected when emissions tests were being carried out, and temporarily reduced their emissions to levels within regulations. When tests were not being carried out, the affected vehicles had emissions levels up to 40 times over what is permitted under U.S. and California regulations.

In addition to the California authorities, the U.S. Environmental Protection Agency, the European Union and authorities in several European countries, are also either investigating the automaker or weighing action against it. In the U.S., attorneys general from at least 27 states are also investigating the company.

The company set aside $7.3 billion earlier this week, anticipating heavy fines from a number of regulatory authorities. In addition, CEO Martin Winterkorn resigned in the wake of the scandal.

Regulatory action is not the full extent of the company's problems. At least 34 federal lawsuits have been filed on behalf of consumers, who argue that the value of their vehicles has been reduced by the company's deceptive practices. In addition, independent car dealerships in California filed a class-action lawsuit against Volkswagen Thursday, over losses they say the scandal is likely to inflict on them.