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How Does General Motor's Emissions Scandal Stack Up To Volkswagen's?

How Does General Motor's Emissions Scandal Stack Up To Volkswagen's?

Owners and lessees of more than 705,000 Duramax diesel trucks sued General Motors Company (NYSE: GM) last week for installing devices to cheat U.S. emissions inspections, according to Bloomberg.

The allegations call to mind the Volkswagen AG (ADR) (OTC: VLKAY) emissions scandal from September 2015. The Environmental Protection Agency found that many Volkswagen cars with diesel engines had software installed that displayed artificially low emissions levels during testing.

That case has only recently been settled, with the company committing to pay $24.5 billion in penalties.

How Do The Two Compare?

Volkswagen quickly admitted to placing the so-called “defeat devices” in its vehicles, and CEO Martin Winterkorn resigned shortly after.

In contrast, GM has adamantly denied any cheating on emissions tests. “These claims are baseless and we will vigorously defend ourselves,” a spokesperson told Benzinga in an email.

Regarding the emissions themselves, the Volkswagen engines emitted up to 40 times the amount of nitrogen oxide allowed in the United States. GM’s engines produced two to five times more emissions than the limit, but the lawsuit claims that the environmental damage could be larger than that of Volkswagen’s cars.

The potential monetary cost to GM is also bigger than what Volkswagen faced.

On the Wall Street side, Volkswagen stock lost about a third of its value in the days following the news. GM shares slid just under 3 percent but recovered by Tuesday.

What To Expect From GM

First and foremost, it is yet to be officially declared that GM cheated on emissions tests. Federal regulators are currently investigating the case.

In the meantime, the automaker will likely be watching the lawsuit filed by the EPA against Fiat Chrysler Automobiles NV (NYSE: FCAU) on May 23. Like GM and Volkswagen, Fiat Chrysler is accused of having used defeat devices on its trucks.

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