Dieselgate: How Volkswagen Sold 11 Million Cars Built To Lie
In September 2015, the United States Environmental Protection Agency announced something that sounded almost too strange to be true. Volkswagen, one of the largest and most respected car makers on earth, had been fitting its diesel vehicles with software designed to cheat emissions tests.
Not a faulty part. Not a design flaw. A piece of code written deliberately, by people who knew exactly what it was for.
The scandal became known as Dieselgate, and it affected around 11 million vehicles worldwide, including almost 1.2 million in the United Kingdom, spread across the Volkswagen, Audi, Seat and Skoda brands. Ordinary families were driving these cars to work and to school with no idea what was happening under the bonnet.
A decade on, the company has paid out more than 30 billion euros, several former managers have been sentenced to prison, and the man who ran the company when it happened has still never faced a verdict.
But the reason this story deserves your attention is not the scale of the fine. It is how ordinary the decision was. Nobody woke up planning to become a criminal. A group of professionals faced a target they could not hit honestly, and chose the shortcut. That choice is available in every business, every week, and it usually starts far smaller than this.
To understand what happened, you have to understand the corner Volkswagen had painted itself into.
The company wanted to conquer the American market with diesel. Diesel cars are efficient and pull well, but they produce nitrogen oxides, a group of pollutants linked to asthma, lung disease and premature death. American emissions rules on those pollutants were strict.
There were honest ways to meet them, but each one cost money, added weight, reduced performance or required drivers to top up a special fluid. Volkswagen had promised clean, powerful, cheap diesel. Something had to give.
What gave was the truth. Engineers created what is known as a defeat device: software that could recognise when a car was sitting in a laboratory test. The clues were simple, such as the steering wheel never turning while the wheels rotated. During the test, the engine ran in a restrained, clean mode and passed comfortably.
Once the car was on a real road, the software switched the controls back for better performance and economy. In everyday driving, some of these vehicles emitted up to 40 times the legally permitted level of nitrogen oxide.
Two things stand out. First, this was not a one man conspiracy in a back office. It ran for years, across multiple brands and millions of vehicles, which means many people either knew or chose not to ask. Second, it was arguably rational in the short term. The cheat let VW sell cars it otherwise could not have sold, in volumes it otherwise could not have reached. It only became a catastrophe when it was discovered, and that is precisely how most corporate fraud starts.
The bill has been enormous. Volkswagen has spent over 30 billion euros globally on fines, vehicle buybacks, compensation, recalls and legal costs. It paid a one billion euro fine to German prosecutors in 2018. Its share price collapsed, its chief executive resigned within days, and its reputation for German engineering integrity, built over decades, was gone almost overnight.
The criminal side moved far more slowly. Two former employees served prison sentences in the United States. In May 2025, nearly ten years after the scandal broke and after a trial lasting almost four years, a German court in Braunschweig convicted four former managers of fraud. The former head of diesel engine development received four and a half years in prison, another senior engineer two years and seven months, and two more received suspended sentences. They are appealing, and proceedings remain open against 31 other individuals.
Martin Winterkorn, chief executive at the time and once the highest paid businessman in Germany, has never reached a verdict. His trial has been split off and repeatedly postponed on health grounds. He denies wrongdoing and rejects responsibility. Prosecutors have alleged he knew about the illegal software by May 2014 at the latest. The United States issued an arrest warrant for him in 2018, but Germany does not extradite its own nationals.
For British owners, the ending was underwhelming. In 2020 the High Court ruled that VW had installed unlawful defeat devices. Rather than fight a long trial, VW settled in 2022, paying £193 million to around 91,000 drivers in England and Wales while admitting no liability. That works out at roughly two thousand pounds each. Against 1.2 million affected vehicles in this country, the overwhelming majority of owners received nothing, because they never joined the claim.
There are four lessons worth taking from this, and they apply whether you own a business, work for one or simply buy things.
The first is about how fraud actually begins. It rarely starts with somebody deciding to be a criminal. It starts with an impossible target and a shortcut that looks temporary. Somebody says they will fix it properly next year. Next year never comes, the shortcut becomes standard, and by the time anyone questions it, admitting the truth would be career ending. If you run a team, be very careful about setting goals that cannot be hit honestly, because you are not really setting a target, you are commissioning a workaround.
The second is that the fine is almost never the real cost. VW's 30 billion euros is enormous, but the deeper damage was to a brand built over generations on the idea that German engineering did not cut corners. Reputation takes decades to build and one press conference to destroy.
The third is intensely practical. Group legal claims in the UK usually work on an opt in basis, which means compensation goes only to the people who actively sign up. The letters and adverts that look like junk are sometimes worth real money. Diesel emissions claims involving several manufacturers have continued to run in the British courts, so if you owned an affected vehicle it is worth checking whether a live claim covers you rather than assuming somebody will post you a cheque.
The fourth is about who ends up paying. Not the executives, who mostly kept their pay. It was owners who watched resale values fall, taxpayers breathing dirtier air, and eventually drivers across the country hit by low emission charges as cities lost patience with diesel. When a big company cheats, the cost has a habit of quietly redistributing itself onto ordinary people who never had a say.