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Why Volkswagen Shares Crashed This Week

By John Rosevear - Sep 24, 2015 at 10:03AM

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A 60-seond look at the global scandal that has engulfed the German auto giant and forced CEO Martin Winterkorn to resign.

The headquarters of Volkswagen Group in Wolfsburg, Germany. Source: Volkswagen Group

Shares of German auto giant Volkswagen Group (VWAGY -0.61%) lost roughly a third of their value in just two trading days, after revelations that millions of VWs and Audis were sold with engines that don't comply with environmental laws -- and software that hid that fact during emissions testing.

Since the 2009 model year, cars equipped with VW's 2.0 liter TDI diesel four-cylinder have apparently been equipped with special software that detects when an emissions test is being done -- and "cleans up" the engine's exhaust so that the car will pass the test. Independent tests have found that in normal driving, the engines are much dirtier than allowed by law.

Volkswagen executives apparently admitted the existence of this secret software to the U.S. Environmental Protection Agency -- and subsequently admitted that 11 million cars with the software have been sold all over the world.

Now, Volkswagen faces billions in potential fines, massive class action lawsuits from outraged owners -- and criminal investigations in the U.S. and several other countries.

Want to know more? This one-minute presentation will give you a look at the key developments in the scandal that will cost Volkswagen billions to resolve -- and that has already forced VW's CEO to resign.

Image source: Volkswagen Group

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