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VW crisis: where will it end?

Emissions scandal runs deep for whole car industry | by Andrew Frankel

The Volkswagen emissions scandal has been described as the biggest shock to hit the business world since the banking crisis of 2008. It led to more than one third of the value of the world’s largest car producer disappearing in just three working days and it claimed the scalp of Martin Winterkorn, unquestionably the most senior figure in the European motor industry and possibly the world. Fines of up to $18 billion in the US alone have been discussed and that’s before anyone has begun to tot up the likely consequences of the massive class action already mobilising in North America against VW, not to mention the impact on VW’s global reputation or, indeed, what happens if it transpires that VW’s so-called ‘defeat device’ is found on its cars in the rest of the world. And what if VW is not the only company involved? Truly, the mind boggles.

So, some clarity is needed. What is known is this: almost 500,000 Volkswagen products (including some Audis) sold in the US with the EA-189 diesel engine have been found to be carrying software that can detect when the car is being tested in laboratory conditions and switches on its full complement of emissions equipment. The same system disables the equipment the rest of the time, allowing emissions (particularly of nitrogen oxides) to rise to up to 40 times the legal limit. Volkswagen has stopped the sale of EA-189-powered cars in the US.

Perhaps the most baffling of all outstanding questions is this: if the cars all had the right emissions equipment, why switch it off on the road? “I expect it was pressure on the engineers that made them do it,” I was told by a senior source in the German car industry. “This system was designed some time ago when emissions controls were not as sophisticated as they are now, and the pressure to pass the tests would have been immense. And I imagine the reason they installed the ‘defeat device’ is that without it there would have been serious consequences not in the laboratory but on the road, either with the car’s performance, driveability, fuel consumption or some combination of the three.”

There is apparently no need for such deceptions these days because emissions control technology has moved on so far, but astonishingly VW continued to sell cars in the US with the illegal equipment both present and functional. “It’s part of a modular system,” said the source, “and would not be easy to engineer out. Besides, to do that would require owning up to its existence and no engineer is going to want to do that.”
As for cars sold in Europe with EA-189 engines, German transport minister Alexander Dobrindt confirmed data manipulation software has been found although it is not presently known whether it was active.

So what happens next? Such is the speed at which this story is moving that things might change between composition and publication, but the extent of the illegality first needs to be quantified, though my source is confident it is confined within the VW empire. Then the damage needs to be assessed. While fines can be counted, any harm to the reputation of VW, its myriad subsidiaries and also the ‘Made in Germany’ brand will prove harder to calculate. Diesel itself might suffer too, especially in the US. Great for CO2 emissions and fuel consumption though it is, pollutant levels of diesel engines are significantly higher than those of equivalent petrol-powered motors.

In the meantime, Volkswagen needs to get to the bottom of this quickly and transparently. Winterkorn may have resigned, but only because the buck stopped with him – there is no evidence that, rightly or wrongly, he had any knowledge of what was going on. As we closed for press, it was reported that Ulrich Hackenberg and Wolfgang Hatz – respectively R&D bosses of Audi and Porsche – were also leaving the company with immediate effect.