RPT-Volkswagen emissions scandal dims outlook for diesel

24 Sep 2015 | Author: | No comments yet »

How uni students took down Volkswagen.

SAN FRANCISCO (Reuters) – In April of 2015, Volkswagen of America, Inc. sent letters to California owners of diesel-powered Audis and Volkswagens informing them of an “emissions service action” affecting the vehicles.It was publicly revealed last week that the company had fudged emissions tests using cheat software on diesel powered cars under its three mainstream brands, Volkwagen, Audi and Skoda.A Cambridge woman is among dozens of people who have filed lawsuits against Volkswagen, accusing the automaker of deceiving customers by marketing and selling tens of thousands of diesel cars that weren’t low emissions as promised, a scandal that yesterday prompted the CEO of the German company to resign. “Certainly there are cases where companies cut corners, but not to this extent,” said Thomas Shapiro, a lawyer who brought the suit on behalf of Nadine Bonda. “To design a car with the intention of deception like this, it’s a new one to me.

BERLIN —Volkswagen chief executive Martin Winterkorn resigned Wednesday, succumbing to pressure for change at the German carmaker, which is reeling from the admission that it deceived U.S. regulators about how much its diesel cars pollute. “Volkswagen needs a fresh start — also in terms of personnel.Long before Volkswagen admitted to cheating on emissions tests for millions of cars worldwide, the automobile industry, Volkswagen included, had a well-known record of sidestepping regulation and even duping regulators. Owners were told they would need to take their cars to a dealer for new software to ensure tailpipe emissions were “optimised and operating efficiently.” The company didn’t explain that it was taking the action in hopes of satisfying government regulators, who were growing increasingly sceptical about the reason for discrepancies between laboratory emissions test results and real world pollution from Volkswagen’s diesel cars. The result? $41.5 billion wiped from the company’s value, up to $25 billion in penalties from the US alone, on top of the costs to recall and fix 11 million cars worldwide.

It’s one of the reasons we jumped into this case so aggressively.” Bonda bought a new Audi A3 TDI in 2010, largely because of the environmental benefits, Shapiro said. VW acknowledged this week that 11 million of its vehicles worldwide, including nearly 500,000 in the United States, were involved in a deception that allowed the vehicles to pass emissions tests while emitting nitrogen oxide at up to 40 times the federal standard. “I am shocked by the events of the past few days. Officials at the California Air Resources Board and the EPA agreed in December of 2014 to allow a voluntary recall of the company’s diesel cars to fix what Volkswagen insisted was a technical – and easily solved – glitch. Volkswagen has admitted it intentionally installed software that switched engines to a cleaner mode during emissions tests and then switched off, improving cars’ performance, but emitting more pollutants. “She was motivated by clean emissions, like a lot of people,” Shapiro said. “The car was marketed that way.

The world’s biggest carmaker by sales has admitted to U.S. regulators that it programmed its cars to detect when they were being tested and alter the running of their diesel engines to conceal their true emissions. Winterkorn said that he took responsibility for the “irregularities that have been found in diesel engines,” but maintained that “I am not aware of any wrong doing on my part.” Volkswagen didn’t immediately name Winterkorn’s successor, but the board will consider his replacement Friday, according to its executive committee, which includes top shareholders. In a statement released Wednesday, the committee said that it didn’t think Winterkorn knew about the software manipulation and it expects “further personnel consequences.” Volkswagen’s public stock has shed 29 percent of its value since Friday, when the Environmental Protection Agency announced that the VW software, known as a “defeat device,” was installed in some 482,000 U.S. cars, spanning model years 2009 through 2015.

Volkswagen, which had no obligation at the time it initiated the recall to disclose the discussions that had led to it, declined to comment on the letter. Going by Volkswagen’s claims, it should easily have let out the least amount of pollution between those three cars — it had a more modern catalytic reduction system which is meant to convert toxic fumes into safer ones — but that wasn’t the case.

Mueller, a former head product strategist, is also a management board member of Porsche SE, and close to the Piech-Porsche family that controls Volkswagen. Winterkorn, who during his eight years in charge oversaw a doubling in Volkswagen’s sales and an almost tripling in profit, said he was shocked that misconduct on such a massive scale had been possible at the company. German Chancellor Angela Merkel had urged Volkswagen to move “as quickly as possible” to restore confidence in a company held up for generations as a paragon of German engineering prowess.

And since VW has not yet said how it will fix the problem, it’s not clear how its cars’ fuel economy and performance will change. “The CEO resigning, it doesn’t really impact me. They triple-checked the accuracy of their equipment after the Volkswagen Jetta they tested showed readings 30 times more than the claimed pollution rating. “It wasn’t that we tested three vehicles and brought down a corporation.

Three vehicles is a very, very small subset of a half-million vehicles, so it was more that we had a role, the data we collected spoke for itself and CARB and EPA did their due diligence. Lutz, the former General Motors vice chairman and Chrysler president, often said the rules were like “trying to cure obesity by requiring clothing manufacturers to make smaller sizes.” The universe of automotive scandals has been a broad and often tragic one, including Ford’s 1978 recalls of 1.5 million Pintos after evidence emerged that its gas tanks were prone to catch fire during impacts.

However, a few months later at a 2014 conference in San Diego, they presented their research to an audience that just happened to have several EPA officials in it. The Chrysler Corporation was indicted in 1987 on charges of disconnecting the odometers of 60,000 cars used by executives and then selling them as new. An engineer by training and VW’s former research and development chief, Winterkorn, 68, was known for his detail-minded style after taking the helm in 2007, helping to foster the company’s image as a green automaker and setting its global ambition. “His thoughts for the company permeated throughout the company,” said Jack Nerad, executive market analyst at Kelley Blue Book. “He had very strong opinions about what Volkswagen should be as a group, what its brand should be. The officials immediately started an investigation after talking to the researchers and their funders from the International Council on Clean Transportation.

He was very, very hands-on.” In the aftermath of that failed corporate ouster, Winterkorn, who earned 15.9 million euros ($17.7 million) last year, was up for a contract extension from VW, according to the Associated Press, a deal that would have kept him at the helm until his retirement. “I have always been driven by my desire to serve this company, especially our customers and employees. When the EPA confronted Volkswagen, the company blamed “various technical issues” for the results but still voluntarily recalled nearly 500,000 cars in December last year to issue a software patch. Volkswagen has been, is and will always be my life,” Winterkorn said. “I am convinced that the Volkswagen Group and its team will overcome this grave crisis.” Eventually they found software called “the switch” which tracks the position of the steering wheel, vehicle speed, how long the engine is on, and air pressure to determine if it is being subjected to an emissions exam. There are no criminal penalties under laws applying to the E.P.A. for violations of motor vehicle clean air rules, though there is a division of the Justice Department devoted to violations of environmental law. “I don’t see them changing this behavior unless criminal penalties are enacted into law that allow the prosecutor to put the executives in jail,” Ms.

Finally, on September 3 2015, the EPA presented mountains of evidence to Volkswagen and forced them to confess the vehicles were loaded with software to cheat on emissions testing. This year, the South Korean authorities claimed that Audi and Toyota had inflated fuel economy claims on two models — the Audi A6 sedan and the Toyota Prius gas-electric hybrid — by over 10 percent. Diesel engines have been hugely popular in Europe and Australia, especially with recent high unleaded petrol prices due to diesel’s much better fuel economy. Diesel fuel contains much more energy per litre than a standard litre of petrol, which, combined with the efficiency of diesel engines, allows modern cars to get over 1000kms of highway driving off just one tank of fuel.

Yes, until you realise there’s a huge catch — diesel engines emit a large amount of nitrogen oxides (NOx) which can cause serious health problems and form a large amount of smog. While Volkswagen said Tuesday it was setting aside 6.5 billion euros ($7.3 billion) to help cover the costs of the crisis, analysts doubt that will be enough. In the past, Europe has been quite loose on its regulations, resulting in around one-third of European cars running on diesel, however it’s also the reason why big cities such as Paris and London have smog problems.

Commerzbank’s Sascha Gommel said that if Volkswagen had to recall all 11 million affected cars, the cost of that alone could top 6 billion euros ($6.7 billion). General Motors paid $45 million in 1995 and recalled nearly half a million Cadillacs that were equipped with a chip that shut off emissions control systems while the air-conditioner was being used, to improve the car’s performance. Companies such as Volkswagen took advantage of this to break into the huge US market, offering “clean diesel” cars that theoretically offered great fuel economy without giving off too much poisonous NOx. Some vehicles from BMW and Opel emitted 10 times as much pollution on the road as in the lab. “We call it the tip of the iceberg,” said Jos Dings, the director of Transport and Environment. “We don’t think this will be limited to Volkswagen.

Environmentalists have long complained that carmakers game the testing regime to exaggerate the fuel-efficiency and emissions readings of their vehicles. Dan Becker, director of the safe climate campaign at the Center for Auto Safety, said that in 2011 he was among a group of environmental lawyers and engineers who traveled to Germany to hear automakers make a pitch for diesel cars. He said that while BMW and Daimler had taken the group’s concerns seriously, Volkswagen officials had not. “They talked down to us,” he said of the company. “They would definitely win an Academy Award for most egregious automaker. For Australians, there is no word yet as to whether the scandal will hit home, although experts have told News Corp Australia as many as 50,000 diesel Volkswagens could be affected.

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