Volkswagen Newsflash    01-10-2015 15:00

+++ The AUSTRALIAN unit of German carmaker Volkswagen said it will conduct a voluntary recall of vehicles fitted with devices designed to mask the level of emissions, as it increased the estimated number of affected cars to nearly 100,000. Volkswagen Group Australia said its head office in Germany had identified another 6,444 cars, 2 days after it put the total figure at 90,000. Although the Australian unit gave no timetable, the recall pulls it in line with head office plans to start recalling up to 11 million vehicles globally in January, following revelations they were fitted with illegal software. The biggest crisis in Volkswagen's 78-year history has wiped more than a third off its share price, forced out its longtime chief executive and sent shockwaves through both the global car industry and the German establishment. Australian regulators have already launched an inquiry to decide if consumers were misled, while law firm Maurice Blackburn has said it is considering filing a class action suit to compensate customers for lost re-sale prices. The Australian Volkswagen unit said it would write to all affected car owners about the recall. It has also set up a website for customers to see if their vehicles, including more than 60,000 Volkswagen branded passenger cars, 5,000 Skodas and more than 17,000 Volkswagen commercial vehicles, have the affected EA 189 diesel engines. It said it had notified Australian authorities of the recall. +++ CALIFORNIA has given carmaker Volkswagen until November 20 to come up with a plan to fix the diesel cars affected by its rigging of emissions tests, a spokesman for the California Air Resources Board (CARB) said. Volkswagen has said up to 11 million diesel vehicles worldwide need to be refitted because they could carry software designed to manipulate emissions tests. The CARB spokesman said the deadline represents 45 business days from an in-use compliance letter sent to Volkswagen dated Sept. 18. The Californian authorities are also carrying out tests on diesel cars made by other manufacturers. "We will publish the results within the next few months", a spokesman was quoted as saying. +++ Volkswagen's U.S. chief executive blames "individuals" for using software to cheat on diesel emissions as lawmakers attacked federal environmental regulators for failing to catch the fraud for years. Michael HORN, head of Volkswagen Americas, said that the company's use of defeat devices, software that evaded U.S. tests for emissions harmful to human health, was not a corporate decision, but something a few employees engineered. "This was a couple of software engineers who put this in for whatever reason", Horn said about the software code inserted into diesel cars since 2009. Volkswagen used different defeat devices in Europe and the United States, Horn said, as emissions standards are different in the 2 regions. "Some people have made the wrong decisions in order to get away with something", Horn said when asked by lawmakers if Volkswagen cheated with defeat devices because it was cheaper than using special injection systems to cut emissions. Lawmakers slammed an Environmental Protection Agency official for not catching Volkswagen. Representative Michael Burgess, a Texas Republican, questioned the size of EPA's annual budget, noting that the cheating was uncovered by a West Virginia University study that had a budget of less than $70,000. "I'm not going to blame our budget for the fact that we missed this cheating", replied the EPA's Christopher Grundler, who said his transportation and air quality office has an annual budget of roughly $100 million. "I do think we do a very good job of setting priorities". Burgess replied: "With all due respect, just looking at the situation, I think the American people ought to ask that we fire you and hire West Virginia University to do our work". Volkswagen is expected next week to provide U.S. and California regulators with a preliminary attempt at a software fix for the defeat devices it installed in 2012-2014 Passats, the U.S. Environmental Protection Agency said. The German automaker has suspended 10 senior managers, including 3 top engineers, as part of its internal investigation. The scandal, the biggest business crisis in Volkswagen's 78-year history, has also forced the ouster of long-time CEO Martin Winterkorn. German prosecutors raided Volkswagen's headquarters and other offices as part of their investigation into whether the company also cheated tests in Europe. Volkswagen said it was supporting the investigation and had handed over a "comprehensive" range of documents. The internal inquiry has found employees began to install defeat devices after realizing a costly new engine would fail U.S. emissions standards, according to sources. Company investigators have found no evidence against the engineers. Representative Chris Collins, a Republican from New York, said he categorically rejected Horn's statement that using defeat devices was not a corporate decision. "Either your entire organization is incompetent when it comes to trying to come up with intellectual property, and I don't believe that for a second, or they are complicit at the highest levels in a massive cover-up that continues today", Collins said. Volkswagen, even after hearing in the spring of 2014 about an independent study that showed emissions irregularities in 2 of its diesel cars, told U.S. air regulators for about a year that the higher emissions data was the result of technical problems with the tests. Horn said the company told regulators only on Sept. 3 that it was using defeat devices and that before then he had no understanding of what they were. Horn apologized to lawmakers for Volkswagen's using defeat devices, and pledged to cooperate with the committee. But he offered little new, saying the company's external investigation remains at a preliminary stage. Owners of 2009 to 2015 Volkswagen diesel cars have more questions than answers about their vehicles and many have joined lawsuits against the company. Horn said fixing the vehicles will take years and require approval from regulators. A small number of cars are expected to need only a software fix. Most of the cars would require more extensive changes including possible installation of urea tanks that neutralize harmful emissions and particulates. Volkswagen is working to obtain conditional approval from EPA and California regulators to begin software fixes in January on some of the 482,000 cars that had defeat devices. Another group of the cars will require fixes that would begin no earlier than mid-2016. But there was no date for fixing the 325,000 oldest "Generation One" cars that need the most repair. The EPA's Grundler told lawmakers he expects Volkswagen to provide options for fixing the cars as early as next week. Representative Frank Pallone, a New Jersey Democrat, said Horn's statements did not give him "much confidence that we're going to see these vehicles get fixed". Pallone pressed EPA air enforcement director Phillip Brooks on whether individuals at Volkswagen or the company itself could face criminal charges. "It would be unfair for me to say much more about what the end result might be", Brooks said. "But it’s a possibility?” Pallone asked. “Certainly”, Brooks answered. +++ Volkswagen's core autos division will likely plunge into a LOSS this year as it is set to shoulder the bulk of the costs from the fallout of the company's rigging of diesel emissions tests, 2 company sources said. VW's namesake brand accounts for about 5 million of the up to 11 million diesel vehicles worldwide that need to be refitted because they could carry software designed to manipulate emissions tests. Europe's largest automaker is setting aside 6.5 billion euros in the third quarter to cover servicing and marketing outlays related to the scandal. One source said the bulk of those costs would be booked to the main brand's accounts. Hamburg-based M.M. Warburg analyst Marc-Rene Tonn says it was still unclear whether VW would allocate the 6.5 billion euros to brand or group accounts. Third-quarter group results, due to be published on Oct. 28, will also reflect 500 million euros of costs for restructuring in Brazil and Russia as well as 1.4 billion euros in gains from VW's sale of shares in Suzuki, Tonn said. VW's namesake brand contributed 1.43 billion euros or 21 percent of the group's 6.82 billion half-year profit, which included strong performances from premium brands Audi and Porsche. +++ German Chancellor Angela MERKEL warned against using the scandal at Volkswagen to pillory the country's entire motor industry. She said VW must give details on its misconduct quickly and openly, adding that many jobs across the industry had to be protected. "What happened at VW is wrong and it needs to be tackled and clarified in the fastest manner possible", she said. "It can only be in everyone's interest that this business is sorted out because the jobs of many people must be secured". Germany is Europe's biggest car manufacturer, and home to BMW and Mercedes-Benz maker Daimler, as well as VW. Merkel promised that the CDU would stand by the industry following the scandal, in which VW admitted to cheating in U.S. emissions tests. "Anyone who tries to pillory the entire automobile industry because of this misconduct in one area will have to deal with the CDU", she said. Public prosecutors said they had searched premises at VW headquarters in Wolfsburg and other places. The prosecutor's office in Braunschweig near Wolfsburg said the target of searches had been documents and data storage linked to VW\'s manipulations of diesel emissions. +++ MEXICO expects preliminary findings from a probe into Volkswagen's compliance with emissions standards within 3 months, the environment minister said, adding the review will include gasoline-fueled cars as well as diesel. Mexico announced last month it was investigating whether Volkswagen cars complied with emissions rules in Latin America's second economy, after Europe's largest carmaker admitted to cheating in U.S. diesel emissions tests. "I expect we can begin to have the first results from Volkswagen diesel vehicles in the next 3 months", Rafael Pacchiano told. "We are going to expand the tests to gasoline vehicles". Last month, Volkswagen said it was checking to determine whether the roughly 32,000 series EA 189 diesel engine vehicles it has sold in Mexico since 2009 provided "altered" emissions data to local authorities. +++ The emissions-cheating scandal shaking Volkswagen has not affected the RESALE VALUE of VW diesel cars in Europe, a car valuation firm said, while warning that could change later in the year. EurotaxGlass's told it had surveyed used car prices in 30 European countries and found that Volkswagen, Europe's largest carmaker which admitted in September it could have emissions-cheating software in up to 11 million vehicles, was not trailing the market significantly in any one. The firm said, however, the limited impact was due to sellers of affected vehicles holding off from lowering prices, and instead preferring to delay sales in the hope the scandal would blow over. "There is no evidence that used car prices are coming under pressure for the Volkswagen brand or for the Volkswagen group models", Christof Engelskirchen, the Swiss-based company's managing director, said. The survey showed the price of used VW diesel cars in Germany fell by 1.5 percent against the market, but Engelskirchen said this could be in line with daily volatility and not necessarily due to the scandal. He added there was likely a lag between the news on Sept. 18 that Volkswagen had fitted diesel vehicles with the so-called defeat devices and its impact on used cars prices. "We see a risk of a more visible downward trend apparent during the next 4 weeks for VW brand and VW group models, once more people have understood the full extent of Dieselgate and begin to deal with it", he said. Sales of new Volkswagen cars across the world have also not slipped following the news of the scandal. Audi, a division of Volkswagen, said sales had risen 6.8 percent in September to 170,900 cars thanks to strong demand from Southern Europe and the United States. +++

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