Volkswagen CEO’s History of Sweating the Details Now Haunts Him

22 Sep 2015 | Author: | No comments yet »

VW rocked by emissions scandal as prosecutors come calling.

The US chief executive of Volkswagen has said the company has “totally screwed up” over the emissions scandal that has rocked the automotive industry.BERLIN — Volkswagen, the world’s top-selling automaker, lost a stunning 17.1 percent of its value Monday after admitting that it intentionally rigged nearly half a million cars to defeat U.S. smog tests. The world’s second-biggest carmaker could face a fine of up to $18bn (£11.6bn), criminal charges for its executives, and legal action from customers and shareholders due to US claims it used a defeat device to falsify emissions data. The software turned on the cars’ full emissions control systems when the cars were being tested by the government, and then turned off those systems during normal driving. (Source: AP photo) German automaker Volkswagen AG admits that it rigged U.S. emissions tests so it would appear that its diesel-powered cars were emitting fewer nitrogen oxides, which can contribute to ozone buildup and respiratory illness.

The Obama administration, meanwhile, announced it is expanding its investigation of what it’s calling “defeat devices” in diesel vehicles, to make sure other manufacturers aren’t using similar schemes to thwart federal Clean Air laws. The device recognises when the car is being tested and immediately cuts emissions to a level that is much lower than normal and unsustainable under usual driving conditions. The software then switches off again, enabling cars to drive more powerfully on the road while emitting as much as 40 times the legal pollution limit.

What we are dealing with is making sure people avoid being poisoned by pollution.” South Korea said on Tuesday it would investigate emissions of the VW Jetta and Gold models plus Audi A3 cars produced in 2014 and 2015. If problems are found, South Korea’s environment ministry said its inquiry could be expanded to all German diesel imports, which have surged in popularity in recent years in a market long dominated by local producers such as Hyundai.

Environmental Protection Agency is working closely with the California Air Resources Board, which spent years pressing Volkswagen to explain why its diesel engines ran dirtier in actual driving than during smog tests. Volkswagen’s chief executive, Martin Winkerton, was under withering pressure Monday as the scandal erased around $15 billion from the company’s market value in the first trading session after the EPA announced the violations Friday. The House energy and commerce committee chairman, Fred Upton, and the oversight and investigations subcommittee chairman, Tim Murphy, announced that the oversight and investigations subcommittee will hold a hearing.

Winkerton apologized, promised an internal investigation and acknowledged that his company had “broken the trust of our customers and the public.” VW shares closed at a nearly three-year low. The investigation also could test the Justice Department’s resolve, announced Sept. 9, to hold individual executives accountable for corporate wrongdoing. The EPA Volkswagen Group CEO Martin Winterkorn issued a statement Sunday saying that the company will fully cooperate with government investigations and has ordered an internal probe. One of the officials involved in uncovering the alleged behaviour has told the Guardian that the emissions-fixing scandal could extend to other companies and countries.

Experts think Volkswagen may have wanted to avoid the cost of additional hardware to meet tough U.S. emissions standards, so it came up with a cheaper software fix. Billions of pounds have been wiped off the value of global carmakers amid growing concerns that emissions tests may have been rigged across the industry. “We need to ask the question, is this happening in other countries and is this happening at other manufacturers? The software also would have helped the cars’ fuel economy numbers, since they get better gas mileage when the emissions control system is turned off. A British expert in low-emission vehicles claimed the manipulation of air pollution data could be widespread and that tests in Europe are “much more open to this sort of abuse”. Volkswagen had insisted for years that unrelated technical issues or unexpected conditions were to blame for the higher pollution levels regulators confirmed during regular driving.

All credit to the EPA for investigating and finding the truth.” Archer, the former managing director of the UK’s Low Carbon Vehicle Partnership and non-executive director for the government’s Renewable Fuels Agency, said the scandal could spread into petrol cars and CO2 levels. “It is probably not limited to diesel and not limited to emissions,” he added. The cost to Toyota, including fines, was a little more $5 billion, according to Stadler. “To some extent the cheating by Volkswagen seems more blatant.

But the numbers are lower, and there are no fatalities involved,” Stadler said. “This suggests that in the ‘heat of the moment,’ the long-term effect on Volkswagen may be overstated.” These testing companies have been verified by regulators in each country, such as the Vehicle Certification Agency, but in the US the tests are conducted by an independent body.

Winterkorn could also face scrutiny from Volkswagen’s board, which meets Friday, and investors, who watched the company’s shares plunge 17.1 percent Monday to a three-year low. There is no evidence that manufacturers cheat the cycle. “The industry acknowledges, however, that the current test method is outdated and is seeking agreement from the European commission for a new emissions test that embraces new testing technologies and is more representative of on-road conditions.” The US allegations involve a series of diesel cars produced by VW and the brands it owns, such as Audi.

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