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(L-R) Bernd Osterloh, works council chairman at Volkswagen; Matthias Mueller, the new chief executive of Volkswagen AG; Bernd Huber, chairman of the supervisory board; Stephan Weil, minister president of Lower Saxony; and Wolfgang Porsche, member of the supervisory board, attend a press conference at the VW factory in Wolfsburg, Germany, 25 September 2015.
EPA/Ole Spata
They’ve got some explaining to do.

Volkswagen’s value destruct-o-meter: $55 billion and counting

Jason Karaian
By Jason Karaian

Global finance and economics editor

Volkswagen’s emissions-cheating scandal rumbles on. It is readying a recall of up to 11 million cars. Public trust in the brand has collapsed. Its former boss faces a criminal investigation for fraud that some think was worse than Enron. Fines, lawsuits, and other penalties loom, with a final bill likely to be measured in the tens of billions of dollars.

Although no other carmaker has been accused of explicitly cheating on emissions tests like Volkswagen, the wide—and growing—gap between emissions tested in labs and out on the road has stoked suspicions across the industry. The viability of diesel-powered cars in general is being called into question.

And as a result, Volkswagen’s woes are dragging down the whole European car industry:

Since the Volkswagen scandal broke a week and a half ago, an astounding amount of market value has been destroyed. The German automaker has lost around 40% of its market cap in that short time, worth a whopping $30 billion. Investors are also shunning the company’s bonds, raising fears of a potential debt default.

And if you consider that the recent turmoil in fellow European car companies’ shares is mostly in response to the Volkswagen news, then the destruction of an additional $25 billion—for a total of $55 billion—in market value can be traced back to the not-so-clever engineers and executives at VW’s headquarters in Wolfsburg.

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