Volkswagen board gathers for crisis meeting

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Martin Winterkorn, who has apologised for manipulating US emission tests, at a recent company presentation

23 September 2015

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Senior directors of German carmaker Volkswagen are due to meet to discuss what action to take after the company was caught manipulating its diesel car emissions tests.

VW faces multiple probes in the US which could result in huge financial damage.

The company, the world’s biggest carmaker, has admitted it deceived US regulators in exhaust emissions tests.

There is speculation over the future of VW chief executive Martin Winterkorn.

Reports in Germany suggest Mr Winterkorn has lost the support of key investors, following the revelation that the firm installed a device to circumvent emission test requirements for diesel cars in the US.

Volkswagen has said 11 million vehicles worldwide are involved and it is setting aside €6.5bn (£4.7bn) to cover costs of the scandal.

Volkswagen scandal

11 million

Vehicles affected worldwide

  • €6.5bn Set aside by VW
  • $18bn Potential fines
  • No. 1 Global carmaker in sales

In the US, the Environmental Protection Agency and the California Air Resources Board are investigating the way VW cheated tests to measure the amount of pollutants coming from its diesel cars.

According to news agencies Bloomberg and AFP, the Department of Justice is also looking into the issue, which raises the possibility of the company and individual executives facing criminal charges.

A DoJ criminal investigation would be serious, as federal authorities can bring charges with severe penalties against a firm and individuals.

Late on Tuesday, New York state’s top lawyer also announced an investigation.

Analysis: Damien McGuinness, BBC Berlin

Cars and the environment – two things that Germany cares so deeply about that they form part of the national character.

So Germans are shocked to discover that for years the country’s mightiest car manufacturer Volkswagen has been rigging environmental tests for diesel emissions in the US.

It’s as if the British suddenly found out that the Queen had a hand in fixing the horse races at Ascot.

One German newspaper has called it the “most expensive act of stupidity in the history of the car industry”.

It’s stupid because manipulating pollution data to boost sales can only be seen as a slap in the face to customers who paid a premium for what they thought was a greener car.

Since the company owned up, its shares have plummeted by more than a third in just two days.

Read the full article here

VW scandal explained

VW boss Winterkorn’s highs and lows

Why diesel sputters in the US market

VW emissions scandal: Your reaction

‘Totally screwed-up’

On Tuesday, Mr Winterkorn issued a fresh apology for the test-rigging, saying he was “endlessly sorry” for the “manipulation”.

The boss of Volkswagen’s US business, Michael Horn, has also admitted the firm “totally screwed up”.

In the UK, the Department of Transport has added its voice to calls for an EU-wide investigation into the affair.

VW shares are down 30% so far this week.

Last Friday, the US Environmental Protection Agency (EPA) said VW diesel cars had much higher emissions than tests had suggested and that software in several diesel cars could deceive regulators.

As a result Volkswagen was ordered to recall half a million cars in the US.

The EPA found the “defeat device”, the device that allowed VW cars to emit less during tests than they would while driving normally, in diesel cars including the Audi A3 and the VW Jetta, Beetle, Golf and Passat models.

VW has stopped selling the relevant diesel models in the US, where diesel cars account for about a quarter of its sales.

The EPA said that the fine for each vehicle would be up to $37,500 (£24,000). With 482,000 cars sold since 2008 involved in the allegations, it means the fines could reach $18bn.

That would be a considerable amount, even for the company that recently overtook Toyota to be the world’s top-selling vehicle maker in the first six months of the year.

Industry experts are concerned about what this means more widely for diesel car manufacturers.

Jim Holder, editorial director of Haymarket Automotive, whose titles include WhatCar and AutoCar, told the BBC that there had never been a scandal in the industry of this size, and that it could make diesel engines for cars uneconomical.

However, Martin Leach, a consultant at Magma and a former head of Ford Europe, told the BBC that the problem is unlikely to emerge elsewhere.

“I don’t think it will extend to other manufacturers. Volkswagen has really engaged to try to beat standards in the US. I would be surprised if it spreads outside the US as Europe’s testing standards were more advanced and therefore more difficult to cheat than the US.”

Tags:business, business news  financial news, business finance, small business websites





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