Volkswagen Scandal Highlights European Stalling on New Emissions Tests

29 Sep 2015 | Author: | No comments yet »

German prosecutors investigate former Volkswagen CEO Winterkorn.

BRUSSELS — European legislators got a jolt this month in their long-running effort to update auto-emissions standards when a German member of the European Parliament suddenly proposed exempting a whole class of vehicles. “This was a huge loophole, and everyone was asking: Where does this idea come from?” recalled Bas Eickhout, a member of the Dutch Green party who sits on the committee on the Environment, Public Health and Food Safety. German prosecutors on Monday opened an investigation against former Volkswagen CEO Martin Winterkorn to establish what his role was in the emissions-rigging scandal that has shaken the world’s largest automaker.

Pon, the Dutch importer of Volkswagens, Audis, SEATs and Skodas, says in a statement that the temporary sales halt applies to 4,100 cars that its dealers still have in stock. As a senior German politician expressed concerns about the effects on the wider economy, Winterkorn became the subject of a preliminary inquiry by prosecutors in Braunschweig into possible fraud relating to the sale of vehicles with manipulated emissions data. In the German system, anyone can file a criminal complaint with prosecutors, who are then obliged to examine it and decide whether there is enough evidence to open a formal investigation.

This was just one particularly brazen example of how European automobile manufacturers have for years sought to thwart or water down regulation of their industry. The cancellation was confirmed Monday — when German prosecutors said they were investigating Winterkorn over VW’s emissions-rigging scandal — by the Hungarian subsidiary of Audi, majority-owned by Volkswagen. The carmaker has been rocked by the scandal, which erupted 10 days ago when a US government agency revealed that it had discovered VW had been using sophisticated software to cheat emissions tests. She said it was too early to say if and when prosecutors may try and interview Winterkorn himself, and that she did not know whether he already had an attorney to represent him. It has been well known for nearly two decades that emissions tests can be easily manipulated and that they often produce results that wildly underestimate the real level of pollution produced by normal driving.

They are now down 40% since the US Environmental Protection Agency accused the carmaker of installing a “defeat device”, which reduced nitrogen oxide (NOx) emissions under test conditions. But European automakers have lobbied hard here to stall the introduction of a more rigorous testing regime that would involve normal driving conditions. He said that he was going “in the interests of the company even though I am not aware of any wrongdoing on my part.” Under German law, it is not possible to bring charges against a company, only against individuals. The latest slump in the shares – they lost 7.5% on Monday – came after VW provided more detail about the 11m cars caught up in dodging the emission tests. They even hired a law firm to quibble over the meaning of “normal,” a maneuver that, along with other interventions, has drastically slowed progress toward a system that would prevent abuses like those by VW.

As long ago as 1998, a Swedish researcher published a detailed study of how manufacturers could deploy technology for “cycle-breaking,” the falsification of results obtained during test cycles used by regulators to assess pollution levels. “The emission test allows manufacturers to design cars to pass the test rather than have low pollution levels on the road,” wrote the researcher, Per Kageson, an environmentalist and a transportation expert who runs Nature Associates, a private consultancy in Stockholm. Lawyers in the UK and other countries said there was likely to be an avalanche of claims when it becomes clear where the cars fitted with the defeat devices were sold.

Audi said Monday 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, news agency dpa reported. The company refused to comment on reports that three senior executives – Heinz-Jakob Neusser, head of brand development at VW, Ulrich Hackenberg, head of research and development at Audi, and Wolfgang Hatz, R&D chief at Porsche – had been suspended. It will have to fix programming it has said is in some 11 million cars worldwide, far more than the 482,000 originally identified by U.S. authorities. Governments in many of the bloc’s 28 members countries, he added, also showed little enthusiasm, particularly those with big auto industries, like Germany, France and Italy. “Let us be honest, the car industry is a major industry in Germany and has a lot of influence,” said Mr. A European environmental organization says it has found some new models of Mercedes, Volkswagens, BMWs and other new cars consume much more gasoline than lab tests claim.

Europe and the United States gauge the level of a vehicle’s pollutants in laboratory tests that are easily cheated on and generally show far lower levels of emissions than so-called Real Drive Emissions tests. The organization, Transport & Environment, said Monday it had found no proof the cars are equipped with the same sort of “defeat devices” installed on diesel-powered Volkswagens to enable them to cheat on emissions tests.

Kageson, the Swedish researcher, said the discrepancy between reality and laboratory test results was already so well known in the 1990s that he had expected quick steps in Europe to “make it much more difficult for manufacturers to beat the tests.” But nothing was done, at least not in Europe. “There was great unwillingness among politicians and in the European Commission and, of course, resistance from manufacturers, who were very content with the existing system,” Mr. This should worry us a little.” Vehicle products make up 17% of German industrial output, according to economists at Capital Economics, while the automotive industry accounts for almost 5% of overall economic output. Economists calculate that if industries with ties to vehicle manufacturing are included, as many as 15% of German jobs may be reliant on the industry in some way.

Hans-Christoph Hirt, a director at the advisers Hermes EOS, which represents about 40 investors, intends to raise questions about the make-up of the board and call for changes to corporate culture. “The supervisory board’s choice of corporate insiders as CEO and chair-elect also raises some real doubts whether the key shareholders have recognised the need for fundamental reform and a real new beginning,” said Hirt. But the European Union has no equivalent of the E.P.A., only a jumble of 28 national regulators. “We are not an enforcement arm that looks into electronic devices,” a commission official said, speaking to journalists here on Friday on the condition of anonymity. Among the parties taking part in the discussions has been the European Automobile Manufacturers’ Association, the industry’s main lobbying group in Brussels.

Cuenot said, referring to the Volkswagen Group and other automakers in the Brussels lobbying association. “They are always coming up with proposals to slow everything down.” In June, a month after the working group produced a preliminary agreement on the technical parameters for real world tests, the manufacturers’ association suddenly demanded the inclusion of an entirely new concept — a “transfer function” that would smooth out extreme variations, adjusting pollution readings downward. The association has also pushed for great leeway in meeting mandatory emission levels once real driving tests begin — and presumably show that actual pollution levels are far higher than those detected in the laboratory. Eickhout, the Dutch politician, said that although all car companies might not have gone as far as Volkswagen to game the system, the industry had been united against the swift introduction of tougher testing. “I am only surprised that Volkswagen invested its innovation budget in cheating, not in making its engine better,” he said. “This shows that they thought they were untouchable.”

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