Scandal-hit VW needs more than a year to fix all cars

7th October 2015, Comments 0 comments

Volkswagen's new boss said Wednesday the auto giant would need more than a year to fix all its pollution-cheating cars, as the company suspended four employees suspected of being behind the global deception.

Matthias Mueller, who took over the driver's seat at VW at the height of the crisis, said he did not believe top management could have been aware of the scandal which threatens to cost the company billions in vehicle overhauls and fines.

The world's biggest carmaker by sales has launched investigations into who was behind the scam involving over 11 million diesel cars which were equipped with software that switches the engine to a low-emissions mode during tests.

The so-called defeat devices then turn off pollution controls when the vehicle is on the road, allowing it to spew out harmful levels of toxic gases.

The shock revelations have wiped more than 40 percent off Volkswagen's market capitalisation, but the direct and indirect costs are still incalculable as the company risks fines in several countries and possible damages from customers' lawsuits.

The powerful US Senate Finance Committee said Wednesday it is probing whether the company used the defeat devices to unfairly gain tax credits on diesel cars sold in the United States.

Altogether, buyers of VW cars and the company itself may have benefitted from more than $50 million (44 million euros) in these subsidies under the 2005 Alternative Motor Vehicle Tax Credit, in its 2009 and 2010 models, the committee said.

VW America's chief Michael Horn is also due to appear before a congressional committee on Thursday.

At home, Volkswagen submitted to authorities its plans and timetable on fixing the affected vehicles.

German Transport Minister Alexander Dobrindt confirmed receipt of the letter, which is to be examined by relevant authorities before the proposed measures can be given the go-ahead.

"If all goes as expected, we can start the repairs in January. By end 2016, all the cars should be in order," VW chief Mueller told the Frankfurter Allgemeine Zeitung daily.

The former Porsche chief added that "four people, including three responsible directors on different levels of the development of Volkswagen engines," had been suspended over the deception, adding that "others were already on partial retirement".

German press have named Audi's development chief Ulrich Hackenberg as among those suspended, although Volkswagen would not confirm the information.

- 'Complex process' -

Mueller said he did not believe that the management team of Martin Winterkorn, who was forced to quit as Volkswagen chief executive at the height of the scandal, could have been aware of the scam.

"Do you really think that a boss would have the time to be concerned about the details of engine software?" he said.

The development of an engine is "a complex process that involves interaction between programmers, engine and gear box developers and those who deal with measurements for official tests," he said, adding that these are tasks in which "a director is not directly involved".

Volkswagen has said that the 6.5 billion euros ($7.3 billion) it set aside in the third quarter was only the estimated sum to cover repairs of affected vehicles.

Mueller outlined the complexity of the repairs, saying: "We need not just three solutions, but thousands."

This is because there are different models of cars involved, with different types of gear boxes or country-specific designs.

Most of the vehicles affected would only need a "software update in the local workshop", said Mueller. "Others need new pumps and catalytic converters."

Fitting in catalytic converters, for instance, could in turn require a complete reconfiguration of the engine, he noted, adding that these works would be "of course carried out free of charge".

- 'Our cars are safe' -

To meet the billions of euros in financial outlays, Mueller said the group would embark on a huge cost-cutting programme and review several projects.

Germany's football world would not be spared, as Volkswagen owns the VfL Wolfsburg club and has investments in 17 professional clubs.

VW needs every cent as in the United States alone it faces up to $18 billion in fines from the Environmental Protection Agency, plus potential payouts from class action lawsuits and penalties from other regulators.

Asked about the looming fines, Mueller noted however: "Think about this: no one died from this, our cars were and are safe."

In what could be a comfort to the group's 600,000 staff at 100 plants worldwide, Mueller said orders had not slumped despite the scandal.

Environmental group Greenpeace criticised the months-long delay until January for the recall, saying it "raises the legal question of how the population will be protected against the excessive nitrogen oxide emissions from manipulated cars until the callback."

Mindful of the far-reaching impact of the VW crisis, Chancellor Angela Merkel said in a speech before the European Parliament that the car industry should not be dragged down by of the scandal.

"Please do not use this to demonise the entire automobile sector, and put into danger the thousands and thousands of jobs in Europe," she urged.

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© 2015 AFP

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