VW ignored warnings on ‘illegal’ cheat software

27 Sep 2015 | Author: | No comments yet »

Germany gives deadline to Volkswagen on meeting pollution standards.

BERLIN/ROME (Reuters) – Volkswagen’s own staff and one of its suppliers warned years ago about software designed to thwart emissions tests, two German newspapers reported on Sunday, as the automaker tries to uncover how long its executives knew about the cheating. BERLIN: Volkswagen ignored warnings from staff and a supplier years ago that the emission test rigging software that sparked the company’s worst ever corporate scandal was illegal, news reports said on Sunday (Sep 28).

The world’s biggest automaker is adding up the cost to its business and reputation of the biggest scandal in its 78-year history, having acknowledged installing software in diesel engines designed to hide their emissions of toxic gasses. German authorities meanwhile heaped pressure on the embattled corporate titan, demanding it set out a timeline by Oct 7 on how it will ensure its diesel cars meet national emission standards without using the cheat technology. If Volkswagen fails to meet the deadline, the KBA warned in a two-page letter, the authority could withdraw approval for the affected models, meaning they could no longer be sold or even moved on German roads. The spiralling scandal has badly tarnished VW’s name, left it exposed to billions of dollars in fines in the United States and to investigations from Norway to India, while wiping about a third off its stock market value in a week. The company’s internal investigation is likely to focus on how far up the chain of command were executives who were responsible for the cheating, and how long were they aware of it.

Last Friday, after a marathon crisis session, the carmaker’s board tapped company insider Matthias Mueller – chief of its luxury sports car brand Porsche – to steer the world’s largest automaker out of the wreckage. Bild am Sonntag also reported that German auto parts supplier Bosch had produced the controversial software but had warned the VW Group as early as 2007 that it was meant for test use only and that using it on the road would be illegal.

The Frankfurter Allgemeine Sonntagszeitung, citing a source on VW’s supervisory board, said the board had received an internal report at its meeting on Friday showing VW technicians had warned about illegal emissions practices in 2011. Mueller, 62, who replaces Martin Winterkorn as CEO, pledged that “we will overcome this crisis” and vowed to restore confidence through “an unsparing investigation and maximum transparency”. But an internal probe has already unearthed more troubling news for VW, as it faces judicial penalties and class action lawsuits, according to German newspaper reports Sunday. A Volkswagen spokesman told AFP the company would soon present an action plan in Germany and “announce when we expect to launch a recall” that would include a software update. “We are working at full throttle” on the plan, the spokesman said.

According to the FAS article headlined “What did Winterkorn know?”, and citing unnamed VW supervisory board sources, the internal probe had so far failed to discover why that warning was not acted on by management. It said that would leave 40,000 cars stuck on Italian lots. “As a precautionary measure, we ask that you suspend immediately the sale, registration and delivery only of vehicles carrying the Euro 5, EA 189 motor,” the newspaper quoted Massimo Nordio, chief executive office of Volkswagen’s Italian unit, as writing in a letter to dealers.

The European Commission said Friday that a new testing procedure will come into force in January, because the current laboratory tests do “not reflect the emissions of vehicles in normal driving conditions”. The transport ministry said the KBA had written to VW demanding it “commit to concrete steps and a timetable” to ensure its cars in Germany meet requirements. EU sources said the change aims to prevent the sort of rigging used by VW after research over several years had shown a difference between lab results and those found in real driving conditions. The German group has suffered its biggest crisis in the same year it had reached its long-time goal – overtaking the Japan’s Toyota as the world’s top car maker by sales. We will inform the KBA about what we are doing and the talks are occurring on the highest level.” “We need a guarantee that cars of German manufacturers are in line with the norms, without manipulation,” Chancellor Angela Merkel’s chief of staff Peter Altmaier told Der Tagesspiegel in an interview published on Sunday. “If a global player from Germany violates environment protection rules that blatantly, this casts a shadow on the environment pledges of German companies,” she told Handelsblatt newspaper in an interview to be published on Monday.

Since the revelation, it has been hit by a cascade of bad news, including the threat of massive fines for which VW has set aside €6.5 billion in provisions for the third quarter. Volkswagen’s shareholders – dominated by the Porsche SE holding company, a separate entity to the luxury brand – are expected to hold emergency talks in Berlin on November 9. German Environment Minister Barbara Hendricks, speaking to the Handelsblatt daily, said the scandal “casts a pall on the environmental promises of German companies”. Volkswagen and other European manufacturers have promoted “clean diesel” technology, benefiting from diesel’s fuel economy but meeting stringent tests for emissions of toxins. The chief of German luxury auto giant Daimler, Dieter Zetsche, told the FAS it was too early to assess the negative impact on Germany’s crucial car sector, adding: “I hope the damage isn’t permanent.”

But the suggestion that this was achieved by cheating on tests could affect the viability of the entire diesel sector and the fate of companies that have bet on it. (Reporting by Steve Scherer, Andreas Cremer, Jonathan Gould, Patricia Uhlig and Michael Nienaber; Writing by Jonathan Gould and Peter Graff; Editing by Jon Boyle)

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