Volkswagen emissions-cheating probe spreads to Asia

22 Sep 2015 | Author: | No comments yet »

For 7 years, Volkswagen used illegal software to thwart pollution regulations.

SEOUL, South Korea – South Korea said Tuesday it will investigate emission levels of Volkswagen diesel vehicles after the world’s top-selling automaker admitted cheating U.S. tests.

Around 15 billion euros ($16.9 billion) was wiped off the market value of Volkswagen AG on Monday following revelations that the German carmaker rigged US emissions tests for about 500,000 diesel cars.Detroit: Volkswagen became the world’s top-selling carmaker trumpeting the environmental friendliness, fuel efficiency and high performance of diesel-powered vehicles that met America’s tough Clean Air laws. Park Pan-kyu, a deputy director at South Korea’s environment ministry, said that four models — Golf, Jetta, Beetle and Audi A3 — are subject to the probe, which is expected to end in November.

VW’s success story was so good that pollution-control advocates did their own tests, hoping to persuade other countries to enforce the same strict standards. Instead, they got a foul-smelling surprise: In actual driving, the VWs spewed as much as 40 times more pollution from tailpipes than allowed by the US Environmental Protection Agency. “We ran the program to show that US diesels are clean,” said John German, senior fellow with the International Council on Clean Transportation, the group that blew the whistle on Volkswagen. “Turned out we found a violator.” The EPA and the California Air Resources Board announced the violations on Friday, accusing VW of installing software that switches on pollution controls during smog tests, then switches them off again so that drivers can enjoy more engine power on the road. Volkswagen AG admitted that it rigged U.S. tests so it would appear that its diesel-powered cars were emitting fewer nitrogen oxides, which can contribute to ozone buildup and respiratory illness. “Volkswagen Korean office says that South Korean models are different from the U.S. models but we’ll have to test,” Park said. “We think they could be similar.” VW got away with this scheme for seven years, and according to the EPA, didn’t come clean even when repeatedly confronted with evidence of excessive pollution.

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. The cars, built in the last seven years, include the Jetta, Beetle, Golf and Passat models, and the Audi A3. “The company will have to recall nearly 500,000 cars, which will cost it millions of dollars, and that’s even before the damage to its brand and potential fines,” said Michael Hewson, chief market analyst at CMC Markets. 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. Instead, VW used secret software — an algorithm that detects when cars are being tested on treadmill-like devices called dynamometers, and stealthily switches the engines to a cleaner mode.

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. 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. European regulators announced parallel investigations, and the EPA said it is expanding its probe to make sure other automakers aren’t using similar devices. And at the White House, spokesman Josh Earnest said “we are quite concerned by some of the reports that we’ve seen about the conduct of this particular company.” “I’d be surprised if Winterkorn can ride this out, but in Germany there’s often a slightly slower process in these matters,” said Christian Stadler, a professor of strategic management at Warwick Business School.

Winterkorn is an engineer by training who led research and development across the VW group beginning in 2007, and became chairman of the management board the same year. On Sept. 9, without making any reference to VW, the Justice Department announced a renewed commitment to holding individual executives accountable for corporate wrongdoing. 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. On Capitol Hill, House Energy and Commerce Committee Chairman Fred Upton, R-Mich., said his subcommittee will determine whether auto buyers were deceived. “The American people deserve answers and assurances that this will not happen again.

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