Volkswagen says 11 million cars hit by scandal, probes multiply

23 Sep 2015 | Author: | No comments yet »

How Volkswagen Can Salvage Its Wrecked Reputation.

The prospect of a global recall of Volkswagens appears to be moving closer after the auto giant admitted 11 million cars could be affected by its emissions cheating scandal. A report by European campaign group Transport and Environment last week found that just one in 10 diesels complied with the new Euro6 emissions standards. Volkswagen Ireland is remaining tight-lipped amid speculation that Irish cars might be involved, with a spokesman saying: “We have no further comment to make for now outside of the official statement.” Adding fuel to the speculation was Volkswagen Group chief Martin Winterkorn conceding that he still doesn’t “have answers to all the questions at this moment”.

While the scandal centres on nitrogen oxide (NOx) emissions, if the EU test system is overhauled to reflect real-life driving conditions rather than test lab conditions, then it’s likely to result in higher official figures for both fuel consumption and CO2 emissions. And authorities in Germany, France and Britain called for probes into the move to equip 11 million diesel cars worldwide with software to cheat during pollution tests. That’s because the Volkswagen Group in Ireland – which comprises Volkswagen, Audi, Skoda and SEAT – accounts for around one in five new cars sold here each year.

While only a proportion of total sales would have the four-cylinder diesel (EA 189) at the centre of the US scandal, it could affect thousands of models stretching back to 2009. The EPA on Friday said diesel variants of VW and Audi models sold in the US over six years featured sophisticated algorithms to deceive the laboratory testing regime. Furthermore, the Passat would have been a popular import and if Ireland is affected by the scam then cars coming from the UK would certainly be as well. And while it insists that newer versions, which comply with the latest EU 6 regulations, are not involved, it is not definitively ruling out pre-EU 6 models.

EU regulators said they were in contact with Volkswagen and US authorities, while the German transport ministry has launched an investigation and requested access to documents. Volkswagen chief executive Martin Winterkorn on Monday reiterated apologies he made on Sunday that his company is “deeply sorry” for the emissions-cheating scandal and will do “everything necessary in order to reverse the damage this has caused”.

It would be more likely that governments, including Ireland’s, would seek reimbursement from Volkswagen for revenue that should have accrued from higher-emission tax bands. A spokesman for Environment Minister Alan Kelly told the Irish Independent that the scandal potentially raises two issues: the implications for air quality and the possible impact on targets for reductions in greenhouse gas emissions.

The cheating didn’t put anyone in immediate danger—though NOx causes asthma and other respiratory illnesses—but VW’s deceit is hard to take because it was intentional. First, VW needs a leadership change. “Look for a shakeup of management,” says PR expert and entrepreneur Peter Shankman. “I can’t imagine that the company can survive just the next three months without saying ‘We’re getting rid of people.’” VW denies rumors that CEO Martin Winterkorn has been fired. Whoever’s left needs to apologize, deeply, sincerely, and repeatedly. “I personally am deeply sorry that we have broken the trust of our customers and the public,” Winterkorn said earlier this week.

It’s unclear how the company will repair the cars so they meet emissions standards—the options aren’t good—but it will spend plenty of money doing it, or on buying them back. That’s likely only the start. “They’re going to take one hell of a nasty hit,” says Shankman. “More than anything, they are going to have to ask themselves ‘can this company survive?’” There won’t be a quick fix, and the scrutiny on the company—and the rest of the auto industry—will be unbelievable. From investors and the press to governments and regulatory bodies, everything is going to be torn apart, every claim questioned. “It will leave some pain, and it might not be recoverable for VW,” Shankman says. “If I were their engineers, I’d be buffing up my resume.

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