German prosecutors investigate ex-VW CEO Martin Winterkorn

28 Sep 2015 | Author: | No comments yet »

Fixing Volkswagen: VW faces daunting challenges in fixing emissions cheating; bill may top $38 bn.

Winterkorn resigned last week following the eruption of a scandal involving the automaker’s use of deceptive software to fool regulators into believing diesel cars were compliant with emissions laws.Volkswagen faces daunting challenges in fixing software that enables cheating on diesel engine emissions tests, a task that’s becoming more urgent because of growing anger from customers.German giant Volkswagen’s worldwide pollution cheating scandal threatens to backfire on diesel, the fuel that powers most new cars in Europe and is defended by manufacturers as a vital means to curb global warming.

The company has admitted to rigging 11 million cars with the software, which hid the fact that the vehicles are emitting harmful pollutants at rates of up to 40 times U.S. standards. Revelations that Volkswagen equipped 11 million of its diesel cars worldwide with software that can switch off those pollution controls — except when it detects it is undergoing official testing — have sharpened the focus on diesel’s risks.

But experts say it’s likely to cost much more as VW tries to comply with U.S. clean air regulations while appeasing diesel owners who paid extra for the cars, thinking they could help the environment without sacrificing performance. ”We understand that owners of the cars affected by the emissions compliance issues are upset,” VW said on a consumer website launched Sunday. Automobile manufacturers were reluctant to comment on diesel’s attributes in the midst of the Volkswagen scandal, which cost the group’s chief executive Martin Winterkorn his job. But former Renault boss Louis Schweitzer laid bare the worst fears of major manufacturers when he told French business daily Les Echos: “It would be disastrous to conclude that diesel must die”. “Let’s stop lying to the French people by encouraging them to buy so-called ecological cars… clean diesel does not exist,” said Emmanuelle Cosse, French national secretary of Europe Ecology — The Greens. Audi said that the engine in question was built into 1.6-liter and 2-liter turbo diesel models in the A1, A3, A4, A6, TT, Q3 and Q5 ranges, German news agency dpa reported.

In France, where most drivers use diesel, 59.6 percent of people say they do not believe the fuel is clean, according to a Harris Interactive survey published this week. But experts said VW will have to strike a careful balance to appease government regulators, make customers happy and avoid emptying the company cash box. A separate survey by Tilder/LCI/Opinionway asked 1000 people if the Volkswagen revelations had changed their view of diesel cars: 27 percent said they now had a “more negative” opinion while 70 percent said it made no difference. “This scandal may yet be seen as a turning point in automotive history. Hybrid and all-electric technologies, in which Apple and Google are poised to pounce, could be the beneficiaries,” the Times of London said in an editorial. “Diesel is in the firing line of the authorities and some ecological activists, and the Volkswagen case is not going to help things, it could make them worse,” said Meissa Tall, automobile industry analyst at management consultancy group Kurt Salmon. A more expensive fix that adds a treatment system wouldn’t hurt performance, but it would cost thousands per car and by one analyst’s estimate, could total more than $20 billion including vehicles in the U.S. and Europe.

Lawmakers will have a significant influence on whether people choose petrol or diesel engines because subsidies for diesel have greatly helped its popularity, she said. Carmakers in Europe argue that diesel cars are essential to achieving a mandatory European Union target of reducing average carbon dioxide emissions from new passenger cars to 95 grams per kilometre by 2020. “Any sign of a political desire to remove diesel from the options available to achieve the average CO2 targets will be to the detriment of manufacturers’ ability to reach the targets,” Renault chief executive Carlos Ghosn, who is also the current head of the European Automobile Manufacturers Association, said in June.

Environmental Protection Agency and the California Air Resources Board accused VW of installing secret software on 2-liter four-cylinder diesel engines that turned on pollution controls for lab tests and shut them off during real-world driving. Putting old-style diesel engines in the same basket as the new Euro 6 compliant models would be “unfair” considering the efforts carmakers have expended to make their vehicles less polluting, he said. Software in the main engine control computer figured out when the cars were being tested on a treadmill-like device called a dynamometer that the EPA used for verification and turned the controls on. With the pollution controls on, the cars are less efficient and won’t accelerate as fast, the two main reasons why people bought the VW diesels, said Matt DeLorenzo, managing editor and a diesel expert for Kelley Blue Book.

But that would anger customers and likely would force VW to compensate them for the reduced mileage, just as Hyundai did when it got caught with inflated fuel economy estimates, DeLorenzo said. ”If it’s really sluggish and doesn’t get out of its own way, that’s a bigger issue (to customers) than fuel economy,” DeLorenzo said. ”People notice that big of a change in performance.” The other option is to add a diesel exhaust treatment system that’s used by other manufacturers and even by VW on larger diesel engines. VW probably tried to avoid urea systems in the beginning because their cost would have driven Jetta and Golf prices above competitors, especially gas-electric hybrids, DeLorenzo said. Before the 2009 model year, U.S. diesel emissions standards weren’t as strict, so those cars likely passed the tests without a defeat device, DeLorenzo said. Whenever the fix comes, it’s possible that owners might not get it done if it hurts their cars’ mileage and performance, and the EPA can’t force people to take their cars in for repairs. And the possibility of failing emissions inspections in states that require them apparently won’t be an issue because of the cheating software. ”The defeat device was specifically designed to ensure that vehicles would pass inspection,” the agency says on its website.

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