VW doesn’t have scandal ‘under control’

German carmaker Volkswagen's logo is seen at a VW dealership in the Queens borough of New York. File picture: Shannon Stapleton, Reuters.

German carmaker Volkswagen's logo is seen at a VW dealership in the Queens borough of New York. File picture: Shannon Stapleton, Reuters.

Published Nov 23, 2015

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Frankfurt - Volkswagen’s emissions scandal is still widening more than two months after its cheating became public, undercutting the company’s argument that only a few rogue engineers knew of the manipulations.

The US Environmental Protection Agency and the California Air Resources Board said Friday they are now probing every Volkswagen and Audi model with a 3-liter diesel engine from model years 2009 through 2016 - adding about 85 000 vehicles to the 482 000 smaller cars that VW admitted in September were rigged to pass emissions tests.

The probe extends the reach of the scandal from VW’s headquarters in Wolfsburg, Germany, to Audi, the Bavarian luxury-car unit that also builds engines for Porsche. Volkswagen had initially denied any cheating when first confronted about a smaller number of 3.0-liter Audi-engineered motors earlier this month. On Friday, the carmaker conceded that US regulators considered one feature of the engines to be illegal.

With the latest revelations, “nobody can really say that it simply slipped through,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “VW has a cultural problem. It’s not just about individuals. It’s about structures that need to change.”

The shares fell 1.5 percent to 106.8 euros at 11:50 a.m. in Frankfurt.

Defeat device

Volkswagen presented California regulators Friday with a proposal to make its 2-liter diesel engines compliant with pollution standards. The company has said the cheating software was present in about 11 million engines around the world, including 1.6-liter and 1.2-liter diesel engines in Europe.

On November 2, the EPA said that a few of the larger-engine models from VW, Audi and Porsche from 2014 to 2016 were found to have equipment that counted as a “defeat device,” which altered emissions-control systems in a way that violated clean-air laws. Volkswagen and Audi officials told the EPA in a meeting on Thursday that the equipment was present in models going back to 2009, the agency said.

“We already stressed in our statement from Nov. 2 that Volkswagen will fully cooperate with the EPA to clarify the issue thoroughly,” the carmaker said Monday in an e-mailed statement. “Exactly that has happened.”

Audi of America had previously issued a stop-sale order for the A6 Quattro, A7 Quattro, A8, A8L and Q5 models from the 2013 to 2016 model years, company spokeswoman Jeri Ward said. In the meeting, Audi told regulators the Q7 from years 2009 to 2012 had the same technology, she said.

Technical experts

Thursday’s meeting between company officials, EPA and the California regulators involved technical experts who talked about three pieces of equipment on the 3.0-liter engines that should have been disclosed as auxiliary emissions control devices, Ward said. According to the agencies, one of the three devices qualifies as a defeat device, she said.

The technology at issue is software that adjusts the temperature of the exhaust system, Ward said. While a violation under U.S. law, the software complies with laws in Europe, she said.

Not all auxiliary emissions control devices violate US pollution laws, but they must be flagged to regulators for further evaluation. If regulators conclude that the devices’ primary purpose is to evade emissions tests, they’re considered a defeat device in violation of the law.

Audi agrees it will need to come up with additional measures that satisfy the regulators, Ward said. The company is cooperating with the agencies and wants to continue to have productive conversations with them, she said.

“The strategy of revealing only a little bit at a time is not what regulators want to see, and it’s unsettling for customers,” said Holger Schmidt, a Frankfurt-based analyst with Equinet. “At present, they still don’t seem to have the situation under control.”

-With assistance from Chris Reiter.

BLOOMBERG

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