As expected, VW have closed ranks and protected their management by throwing the engineers under the bus. At this point only an insane person would believe this was the work of 'a couple of software engineers' rather than a corporate decision at the highest level. Equally, at this point it is useless to spend time trying to figure out who knew what and when. Instead, investigators should be studying the culture that lead to this crisis. They need to realise, and quickly, that it's most likely that the pressure to grow at all costs created dishonest employees. A lot of corporations have ethics committees, mission statements, LEAN initiatives and other corporate buzzwords but that's all bluster designed to mask the simple fact that the shareholders are king. To keep the shareholders happy, corners are cut, customers are ignored, engineers are sidelined and anyone who stands in the way of a profitable quarter is simply laid off.
A National Business Ethics Survey that looked at how employees viewed ethics in their organizations over a 10-year period found that the most common cause for an employee to compromise ethics did indeed come from the top. 70% of employees identified pressure to meet unrealistic business objectives as most likely to cause them to compromise their ethical standards, and 75% identified either their senior or middle management as the primary source of pressure they feel to compromise the standards of their organizations.
VW can survive this, although they might not look like the company they are today. Sure, an 11 million car recall looks pretty bad on paper but it pales in comparison to GM's problems with their faulty ignition switch, or Toyota's unintended acceleration issues. In those cases, not only were recalls required, but people actually died. GM and Toyota survived and continue to sell cars today, and VW will too.
A big question for VW is 'will they survive in the US?' to which I suspect the answer is a firm 'no'. Americans have long been wary of VW for reasons that have never been entirely clear. VW have been painted as unreliable, expensive to repair, crappy cars that cost too much. My personal experience of VW in America has been quite the opposite - in fact I found them to be pretty much the same as they were in Europe; high quality cars for a reasonable cost. The repair and maintenance costs are on par with Japanese imports. But nevertheless, the already skeptical and lawsuit-happy nature of the American public means that VW will likely pull out of the US market completely once the diesel scandal is settled.