Well, VW (corporation) will survive this, and VWoA will survive, but they are certainly going to see a financial hit for whatever it costs to deal with this plus certainly a hit to their reputation. Toyota survived accelerator-pedal-gate, GM will survive ignition-switch-gate, Honda will survive Takata-airbag-gate, VW will survive diesel-emissions-gate. The other manufacturers are selling just as many cars as they did before their respective catastrophe.
I suspect that the SCR-equipped cars - the ones that require "diesel exhaust fluid" or "AdBlue" - which is 2012-on Passat TDI and all models 2015-on including the 2016 models being held at port - will be fixable with a reflash. Evidently the Passat has been using DEF at a rate of about 1% of the fuel consumption, compared to "industry norm" of about 3%, so it may require increasing the DEF application rate. The car will require the DEF tank to be refilled more often, but that is no big deal. It may take a while for VW to prove to the EPA that their reflash works, given that they were already given an opportunity to do that and threw it away. (the recent emissions reflash on those cars didn't do what it needed to do)
The bigger trouble will be the LNT-equipped cars - 2009-2014 Jetta, Golf, New Beetle, Audi A3. Unfortunately, that's most of the 480,000 affected cars. The cars were able to pass the emission testing in some fashion, but there has to be a darn good reason VW didn't leave that low-emissions mode active all the time, and my educated guess is that the extra rich-mixture and high-EGR operation necessary to regenerate the LNT will clog the DPF prematurely, and the cars won't pass the durability requirements.
They are going to have to re-flash these cars to operate in low-emissions mode all the time ... but that had better go hand-in-hand with an ironclad and longer emission control warranty. Replacing the DPF every few tens of thousands of kilometers (my guess) will get old fast. It will also get expensive. There is no chance of retrofitting SCR - it's too expensive. There is some chance of doing what Mercedes did with the 2007 - 2009 E320CDI ... use LNT in conjunction with SCR; the LNT can be designed to produce the ammonia that the SCR needs. This will require an exhaust system redesign plus re-flashing the computer. Problem here is that such a redesign would take a year or two to design and validate and tool up to build 400,000 of them. The older of these cars won't be worth what this fix will cost to do. It's quite possible that VW will offer a buy-back on all of the LNT-equipped cars in North America. (There are about 11 million affected worldwide, but those sold in areas with less stringent standards may not need as much done to fix them)
This could very well be the biggest buy-back and scrap campaign ever. Nissan bought back 33,000 vans in the early nineties because they couldn't stop them from catching fire. Toyota has bought back and scrapped an unknown but increasing number of Tacoma trucks for having frames that rust apart.
