Test case against Volkswagen opens — why it matters

The first major court case against Volkswagen in Germany over its cheating in emissions tests involving millions of diesel cars begins Monday. It will examine whether the auto giant should have informed investors sooner.

Why is there a test case?

The model plaintiff in this case is Deka, a fund company of the Sparkasse Group. Beyond that, there are more than a thousand other plaintiffs — both corporate and private — who also want to enforce their demands. At the same time, there are legal proceedings in Stuttgart against Volkswagen and Porsche. The procedure at Braunschweig's higher regional court is the larger one, with claims particularly against VW totaling more than €9 billion ($10.42 billion). While Monday's case deals with technical aspects of how and when the group communicated with financial markets, the court will have to lay out a timeline of the scandal and determine when executives learned about the cheating. Such details are vital to ongoing criminal investigations in Germany.

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What does the test case hope to establish?

Judges will rule on more than 200 questions submitted by the two sides in the case. Among the most vital are whether VW should have let investors know about its cheating software, whether it deliberately covered up the information, and which board members knew what — and when.

Claims against VW and Porsche amount to more than €9 billion

What were the losses of the plaintiffs?

That depends on the time of the share purchase. The lawyers under the leadership of Andreas Tilp, who represent the model plaintiff before the higher regional court, will use the closing price of the VW shares before the US Environmental Protection Agency (EPA) made public the exhaust emissions manipulation on September 18, 2015.

EPA's allegations sent Volkswagen shares plummeting by 37 percent from the closing price the day before the announcement to €106 on September 22, 2015, when the Wolfsburg-based auto manufacturer first issued a statement to financial markets warning of risks to earnings from potential penalties.

Dieselgate: A timeline

The disaster unfolds

About two weeks after Volkswagen admitted behind closed doors to US environmental regulators that it had installed cheating software in some 11 million of its diesel vehicles worldwide, the Environmental Protection Agency shared that information with the public. It was September 18, 2015. The ensuing crisis would eventually take a few unexpected turns.

Dieselgate: A timeline

The boss must go, long live the boss

Volkswagen's then-CEO Martin Winterkorn (above) had little choice but to step down several days after news of the scandal broke. In September, he tendered his resignation, but retained his other posts within the Volkswagen Group. Winterkorn's successor was Matthias Müller. Until taking the reins at VW, Müller had been the chairman at Porsche, a VW subsidiary.

Dieselgate: A timeline

Raiding headquarters

Regulators in the US weren't the only ones investigating VW. Authorities in Lower Saxony, the German state in which VW is based, were also scrutinizing the company. On October 8, state prosecutors raided VW's headquarters along with several other corporate locations.

Dieselgate: A timeline

Hell breaks loose

On January 4, 2016, the US government filed a lawsuit against VW in Detroit, accusing the German automaker of fraud and violations of American climate protection regulations. The lawsuit sought up to $46 billion for violations of the Clean Air Act.

Dieselgate: A timeline

Quit or forced out?

In March, the head of VW in the US, Michael Horn, resigned. In the initial days and weeks after the scandal broke, he was the one US authorities turned to for information. He issued an official apology on behalf of the automaker, asking for the public's forgiveness.

Dieselgate: A timeline


On October 25, a US judge approved a final settlement that would have VW pay $15.3 billion. In addition, affected cars would be retrofitted with better, non-deceptive hardware and software, or else VW would buy them back completely from customers.

Dieselgate: A timeline


When dieselgate first emerged in 2015, analysts said it was likely other car makers were also cheating tests. But it wasn't until 2017 that other companies were targeted in probes. In July, German authorities launched investigations into luxury car makers Porsche and Daimler for allegedly cheating emissions tests. Others, such as Audi and Chrysler, have also been hit by similar allegations.

Dieselgate: A timeline

Public still supportive

Despite dieselgate, VW has managed to keep the emissions scandal from utterly tarnishing its image. According to several polls, between 55 to 67 percent of Germans continue to trust the automaker. In the US, polls show that roughly 50 percent still believe the German company produces worthwhile vehicles.

Dieselgate: A timeline

Fuming over monkeys

In late January, however, VW suffered another heavy blow over reports that the company experimented on monkeys and made the animals inhale diesel fumes. To make matters worse, a separate experiment that had humans inhale relatively harmless nitrogen dioxide was revealed at the same time. Some media wrongly interpreted this to mean humans were also inhaling toxic fumes.

How do the lawyers want to proceed?

Lawyers see the core problem as not only with the announcement of the manipulation on September 18, 2015, but also far earlier in April 2008. Because, as Tilp says, VW had recognized years before that the reduction of exhaust gases to the prescribed level was not possible. If this turns out to be true, the stock market should have been informed immediately.

Read also: VW loses bid to block investigators

VW submitted an application for certification of the first engine with the technology for exhaust gas reduction. "From then on, VW cheated," says Tilp. In addition, cover-up attempts have continued from March 2014, when VW learned that a study by the International Council on Clean Transportation (ICCT) revealed that the emissions regulations of many cars were not adhered to.

What does VW think?

VW is focusing on September 18, because at that point the board had only just learned of the extent of the scandal. The world's biggest carmaker says the information available at the time did not make communicating with shareholders legally necessary. They argue that the cheating was a scheme by a small group of engineers acting without their superiors' knowledge or authorization. Once alerted by the US authorities, executives did not realize how serious the scandal would become, they add, believing it could be resolved amicably. 

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At the center of attention will be Martin Winterkorn, the engineer who claimed to know "every nut and bolt" of Volkswagen's entire range of models and ran the company as chief executive from 2007 to 2015.

How long will the trial last?

It is initially scheduled to run until December 10, 2018. The higher regional court could deliver a verdict next year.