Volkswagen loses billions in its market capitalization value due to the diesel emissions scandal. The legal fines will be painful and impossible to quantify however it is unlikely to remain a topic for years on considering it is not a bank. New chief executive, strong balance sheet and a robust commercial brand name potentially puts the Volkswagen Empire in a perfect position to rebound. Shares of the popular German car giant, Volkswagen (OTCQX:VLKAY), plummeted by roughly 30%, erasing over 15 billion euros from the company's market cap, at the beginning of last week after the firm admitted systematically installing falsified software in their cars to give false emissions data. Briefly, engineers had developed unique computer software that were implemented into over 11 million (482,000 in the US alone) Volkswagen car engines that could detect when the companies cars were being tested by monitoring speed, engine operation, air pressure and even the position of the steering wheel. When the cars were operating under controlled laboratory conditions the computer software would become activated putting for the vehicle into a safety mode function in which the engine would run below normal power and performance. As a result, the engines emitted less nitrogen oxide when under safe conditions however when back on the road the pollutants released up to 40 times above the allowed limit in the US. Volkswagen have now recalled almost half a million cars in the US alone and set aside €6.5bn (£4.7bn) to cover costs, however with the power the Environmental Protection Agency (EPA) has, to charge up to $37,500 for each vehicle that breaches standards, a maximum fine of about $18bn is likely. This does not include the legal action from consumers and shareholders that may follow. Altogether the potential fines that Volkswagen faces would be a considerable amount, even for a company that has a market value of about €66bn ($75bn; £48bn) and that recently overtook Toyota (NYSE:TM) to be the world's top-selling vehicle maker. Lessons from the BP oil spill clearly show that the initial management estimates for the total fine cost often prove to be woefully underestimated. Considering this recent fiasco and a difficult start to the year Volkswagen is facing due to lower than expected sales coming from major regions like China and the U.S (not to mention Switzerland seeking a temporary sales ban on all VW cars affected by the emissions scandal), Volkswagen faces not only a short-term drop in sales and a hit to its reputation but also the longer-term risk of litigation in the U.S which will unfavourable contribute to the excessive downward pressure. In addition to this, Volkswagen is currently dual listed in both European Indices (DAX index) and the global Dow Jones Suitability Indices and index providers have now started to question if the company is eligible to hold its vital position in the index. If index providers especially global indices such as S&P Dow Jones, come to the conclusion that VW is not eligible for inclusion anymore, large sell orders of VW shares by institutional fund mangers, of whom replicate the index, will inevitably result in the share price nose diving further more. However investors should still keep VW on their watch list and possibly look at buying into the stock, as VW is not likely to be subjected to enormous political and media pressure going forward. This is because car manufactures do not excite the same level of scrutiny as global investment banks do. A swift apology and change in CEO supplemented with a large universal brand name puts Volkswagen in the perfect position to rebound from this scandal. Volkswagen is currently Europe's largest automobile manufacturer produces 12 different car brands, including VW, Porsche and Audi, across 153 countries - these facts are unlikely to disappear from the recent emission scandal. However investors should not be expecting this rebound overnight rather over a longer duration, as the stock would continue to react negatively on the recent news flow. Many analysts remain bullish on Volkswagen shares and this is understandable for many reasons. Currently VW has a price-to-earnings ratio of 5.7, an important metric used by equity analysts to gauge how expensive a stock is. The current average for the German DAX is 14.75, which displays how cheap the stock currently is, however as the potential cost from fines and legal challenges are unknown it is difficult to determine if VW has reached its lowest market value. In the past, the scandal in the Japanese car giant, Toyota, in 2009-2010 showed us that the shares didn't reach their lowest point until two years later in 2011. In relation to its competitors Volkswagen vehicles are less susceptible to technology swings with research suggesting that BMW, Peugeot and Daimler engines are 35, 40 and 45 percent exposed to diesel technology with VW engines only being exposed to technology by 25 percent. The enormous size of the company enables large amounts of reserved cash to be used to pay for all the fines especially if regulators allow the fines to be spread over a long time period. The balance sheet also shows shareholders equity titled at €96bn at the end of June relative to net debts which are forecasted to rise to approximately €10bn by the end of the year. Therefore with shareholder equity being nearly 10 fold greater than net debt, the company is in an extremely strong position, as shown by the balance sheet, to survive. Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks. More