Main points of Volkswagen scandal so far

4th November 2015, Comments 0 comments

German auto giant Volkswagen has been at the epicentre of one of the biggest-ever scandals in the automobile industry since mid-September when US authorities accused it of installing pollution-cheating software in some of its diesel engines.

More than six weeks later, the affair is showing no signs of coming to an end, and the carmaker said it has now uncovered "irregularities" in the engines of even more vehicles.

Here are the main points of the scandal to date:

-- What is known so far?

Volkswagen admitted to fitting the engines of 11 million diesel vehicles worldwide with so-called defeat devices, sophisticated software that can skew the results of tests for nitrogen oxide emissions. The devices turn on pollution controls when cars are undergoing tests and off when they are back on the road, allowing them to spew out harmful levels of nitrogen oxide. They have been fitted to 1.2, 1.6 and 2.0-litre engines of the type EA189.

Out of the VW group's 12 different brands, five are affected -- VW itself, Audi, SEAT, Skoda and VW commercial vehicles. Around 8.5 million vehicles are affected in Europe and 480,000 in the United States.

-- What are the latest developments?

On Monday, the US Environment Protection Agency (EPA), which was the source of the initial allegations, accused VW of installing the software into the bigger 3.0-litre diesel engines of some high-end models of VW, Audi and Porsche sold in the United States. According to the EPA, at least 10,000 vehicles are affected.

VW denied the new accusations but said it would "cooperate fully with the EPA (to) clarify this matter in its entirety."

On Tuesday, VW revealed that it had uncovered "unexplained inconsistencies" in carbon emissions of around 800,000 more vehicles.

A VW spokesman said that the 1.4, 1.6 and 2.0 litre motors of VW, Skoda, Audi and Seat vehicles are affected, adding that these cars had been found to be releasing more of greenhouse gas CO2 than previous tests had shown.

-- What are the consequences for customers?

The 11 million vehicles fitted with the rogue devices are being recalled in a massive campaign to remove the defeat device.

For some models, a simple software adjustment is necessary, but for most of the others, the engine itself needs to be adjusted mechanically. The recall is scheduled to begin at the start of 2016 and could last the rest of the year.

The owners of the vehicles involved will be contacted directly by their dealer who will inform them of the steps that need to be taken.

For the owners of the 800,000 vehicles which are releasing more CO2 gas than advertised, there will be no changes in practice. Volkswagen must simply adjust the description of the technical specifications to reflect the actual levels of carbon gas emission.

At the same time, because the customers have effectively been fraudulently sold a car, they could claim compensation or their money back.

-- What are the consequences for Volkswagen?

The carmaker is in its biggest-ever crisis. Chief executive Martin Winterkorn resigned and was replaced by the then head of the group's luxury sports car division Porsche, Matthias Mueller.

Mueller promised to be ruthless in getting to the bottom of the scandal.

A number of executives have been suspended. Mueller has drawn up a far-reaching reorganisation and a sea-change in VW's culture.

The recall action is expected to cost billions of euros (dollars). In addition, the carmaker faces potential fines -- amounting to as much as $18 billion (16 billion euros) in the United States alone -- as well as legal costs from private lawsuits. As a result, the scandal has wiped nearly 40 percent off Volkswagen's market capitalisation since the scandal broke.

Volkswagen has set aside 6.5 billion euros in provisions to cover the initial costs, pushing it into its first quarterly loss in more than 15 years in the third quarter of this year. The full cost of the affair are still incalculable, but experts suggest it could run to tens of billions of euros.

Some industry experts have begun to speculate about a possible break-up of the group, with Volkswagen's up-scale niche brands such as Lamborghini or Ducata mooted as possible divestment candidates.

-- Which questions must still be answered?

The question of responsibility needs to be answered and VW has commissioned both internal and external investigations to find the masterminds behind the deception. German prosecutors have also launched a criminal investigation.

VW has denied the EPA's accusations regarding the bigger 3.0-litre engines, but offered no explanation so far for the irregularities found by the authorities.

With regard to the carbon emission irregularities: questions left unanswered included whether the information was deliberately falsified and by whom. Do the excess carbon emissions exceed regulatory norms? How can customers find out if that is the case?


© 2015 AFP

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