Volkswagen's reputation erodes as diesel emissions scandal widens

Martin Winterkorn, VW CEO, has said he is "deeply sorry" the German company violated U.S. emissions standards. (AP Photo/Paul Sancya)

Jim Lyon is one unhappy Volkswagen customer.

"I bought into the clean diesel hype," the Chickamauga, Ga., man said Monday of his decision three years ago to buy a new VW Golf TDI instead of the hybrid electric Toyota Prius, as he searched for the most environmentally friendly car on the market.

Lyon was left reeling by charges Friday from the U.S. Environmental Protection Agency and the California Air Resources Board that VW rigged the software of some 482,000 diesel cars - including Lyon's - to evade vehicle emissions standards. That was followed Sunday by an apology from VW CEO Martin Winterkorn and an announcement by VW that it would halt the sale of all 2015 and 2016 models with the four-cylinder 2.0-liter TDI engine.

photo In this Nov. 20, 2008, file photo a Volkswagen Jetta TDI diesel engine is displayed at the Los Angeles Auto Show.

By the numbers

Percentage of diesel and gas Passats sold in the U.S.Year // Diesel // Gasoline2011 // 21.09% // 78.91%2012 // 22.67% // 77.33%2013 // 32.15% // 67.85%2014 // 29.72% // 70.28%2015 // 27.68% // 72.32%Average // 27.54% // 72.46%Source: Kelley Blue Book and Autotrader

Read more

* Sohn: What was Volkswagen thinking? * Cooper: VW brand on the line* VW unveils new Passat design for 2016 * VW rocked by emissions scandal as prosecutors come calling* For 7 years, VW software thwarted pollution regulations * VW scandal has TN officials fuming after giving millions in incentives * Volkswagen tells dealers to stop selling 2015 diesel cars * Cooper: VW's alleged emissions 'defeat device' disheartening* VW could be fined $18 billion for cheating on emission rules* VW stock crashes after admitting it rigged U.S. emission tests* EPA: VW intentionally violates clean air standards

"I was really disappointed to hear the news," Lyon said. "You feel like you've been betrayed."

He's not alone.

News of VW's alleged malfeasance hit hard in Chattanooga, the site of VW's only U.S. assembly plant, which has been held up as a shining example of the city's renaissance.

As the automaker got a big black eye, officials and residents here wondered how the scandal would play out, and what effect it might have on the Chattanooga-made Passat, since about a quarter of the Passat model vehicles have diesel engines.

Feelings ranged from outrage to a belief that VW could bounce back, as other automakers have done from recent high-profile recalls.

Volkswagen, the world's top-selling automaker, lost a stunning 17.1 percent of its value Monday, cutting the company's market value by $15 billion.

Tennessee Gov. Bill Haslam and other officials, who've pumped hundreds of millions of dollars of incentives into VW's Chattanooga operation, expressed dismay.

"If these allegations are true, then I think somebody probably ought to go to jail over it," Tennessee House Majority Leader Gerald McCormick, R-Chattanooga, said. "It's unbelievable that a company that size with that many attorneys employed and their clean reputation would even do anything like that."

Haslam, who said both EPA's top administrator and VW officials gave him a "head's up" about the situation last week, also noted the German auto manufacturer "is a major partner for us both in terms of investment and the jobs created."

Lt. Gov. Ron Ramsey, the Senate speaker, told the Times Free Press that the revelations are: "Depressing, hard to believe. On and on. We've made a huge investment."

The state's latest incentives, some $168 million to assist VW's planned addition of SUV production in Chattanooga, were approved by the State Building Commission just earlier this month. McCormick said he hopes VW fixes the problem so it can resume its growth in Tennessee.

An "I-told-you-so" came from Chattanoogan Helen Burns Sharp, a critic of payment in lieu of taxes (PILOT) tax breaks given to local companies, such as VW.

"Last year alone, VW received an $8 million property tax break. The tax breaks last until 2039," Burns wrote in an email. "I hope this will be a wake-up call to the city/county/chamber that we need to include strong 'clawback' language in future PILOT agreements to protect the public when something like this goes awry and jeopardizes a company's investment, jobs, and wage commitments."

Winterkorn's decision to apologize was smart from a public relations standpoint, said Michael Friedman, an assistant professor of communication at the University of Tennessee at Chattanooga.

"[It's better] the sooner that you just tell the truth that you messed up," Friedman said. "This is the United States of America, this is the land of second chances."

But the U.S. Department of Justice is reportedly considering criminal charges against VW officials, which limits company officials' inclination for full disclosure.

"You have to think, 'Who's going to come after me?'" Friedman said.

Long-term, if it turns out that a host of VW officials were aware of the deception, then people could steer away from Volkswagen for years, Friedman said, just as some people still boycott Exxon because of the 1985 Valdez oil spill.

And it's made a shambles, he said, of VW's "this ain't your daddy's diesel" advertising campaign, which touts its diesel engines as being clean and without compromises in performance.

"Their whole marketing plan has been completely destroyed," Friedman said.

Contact staff writer Tim Omarzu at or or or 423-757-6651.

Contact Andy Sher at or 615-255-0550.

Contact Dave Flessner at dflessner@timesfree or at 757-6340.