Volkswagen in Race to Detail Refit Plan Within a Week

Before you go, we thought you'd like these...
Before you go close icon
Franck Fife, AFP/Getty Images
By Andreas Cremer and Barbara Lewis

BERLIN and BRUSSELS -- Volkswagen (VLKAY) is under pressure to give details within the next week of its plan to refit up to 11 million diesel vehicles, with its U.S. chief due to testify to lawmakers Thursday and German regulators also demanding swift action.

The German carmaker needs to fix software that allowed it to cheat emissions tests, the discovery of which has sparked the biggest business crisis in its 78-year history.

The scandal has wiped more than a third off Volkswagen's share price, forced out its long-time chief executive and rocked both global auto markets and the German establishment.

Europe's biggest carmaker said Thursday it would take several months to get to the bottom of who was responsible for the software, although it promised to "inform the public in regard to solutions found for the problems next week."

But analysts say it could be a challenge to do the refits without leaving owners with vehicles that deliver diminished fuel economy and performance, or require more maintenance -- problems that could potentially multiply lawsuits against the company and further sully its reputation.

In a sign of the complexity, Belgian car importer D'Ieteren told Reuters it hadn't heard any technical details about the refit yet, and that Volkswagen had committed only to having a plan set by the end of this month.

Volkswagen said Friday it was taking time to come up with solutions because automatic and manual vehicles and models with different engine categories needed different fixes.

In the coming days, the carmaker will launch country-specific websites where customers can enter details of their vehicles to find out if they're affected, it said.

In the meantime, customers and dealers are seething.

"There's been no news whatsoever from Volkswagen, from the dealer, any letter, any phone call, nothing whatsoever," said Giacomo Corrado, who lives outside San Francisco and leases a diesel Golf.

Bradley Hoffman, chairman of the American International Automobile Dealers, said Volkswagen hadn't communicated well "out of the gate," although he was confident they would ultimately make things right with customers.

"I want them to get off their you know whats and handle this thing swiftly and correctly. But I know they will," he said. "This is urgent for them because it's a public relations nightmare ... They're still in assessment mode."

Volkswagen shares, which have lost more than $30 billion in value since the crisis began, dipped to a new 4-year low of 91.60 euros Friday.

Two-Speed Response

The scandal has thrown the spotlight on problems with the availability and quality of official emissions data that campaigners have complained about for years.

The U.S. Environmental Protection Agency, which announced Volkswagen's cheating in diesel emissions tests on Sept. 18, provides detailed information on vehicle performance in tests. Published data from German counterpart KBA, upon which some other national bodies rely for tests on Volkswagen vehicles, don't break down the test performance of individual vehicle models.

Asked whether there was any way, other than asking the manufacturer, for the public to find out if a specific model complies with EU rules, a spokesman for the KBA said: "I dont think so."

U.S. authorities have generally been quicker to respond to the crisis too, leaving Europe open to the charge of letting down consumers and being too close to its struggling car industry -- a key source of jobs and export income.

The EPA, which said on Sept. 25 it would toughen tests for all carmakers, will scrutinize at least 28 diesel models made by BMW, Chrysler, General Motors, Land Rover and Mercedes-Benz, the Financial Times reported Friday.

A U.S. congressional oversight panel said Thursday it had called Volkswagen's U.S. chief, Michael Horn to testify on Oct. 8, while more than 30 U.S. state attorneys general have banded together to conduct an investigation into Volkswagen, New York Attorney General Eric Schneiderman said Friday.

European authorities are seeking answers too. Germany's KBA has set Volkswagen an Oct. 7 deadline to present a plan to bring diesel emissions into line with the law.

But the response in much of Europe has been slower.

French prosecutors only opened a preliminary inquiry into Volkswagen on Friday, whereas the U.S. Department of Justice was reported Sept. 21 to have started a criminal investigation.

European carmakers are lobbying hard to limit the fallout from the scandal, which they fear could lead to costlier regulations and hit sales of diesel vehicles -- which account for almost a half of sales in Europe compared with a small fraction in the United States.

%VIRTUAL-pullquote-We understand that the U.S. want to challenge the leadership role that the European manufacturers have taken globally in this technology.%In a letter dated Sept. 29 to the European Union's council of ministers, the European Automobile Manufacturers' Association said manufacturers would need until 2019 to fully meet some new pollution limits.

It also suggested U.S. authorities had an ulterior motive for their actions. "We understand that the U.S. want to challenge the leadership role that the European manufacturers have taken globally in this technology," said the letter, seen by Reuters, referring to diesel cars.

The car industry is particularly important to Germany, Europe's largest economy, where the likes of BMW, Daimler and Volkswagen employ more than 750,000 people. Berlin has in the past lobbied the EU against tougher regulations on carmakers.

German Vice Chancellor Sigmar Gabriel, who once sat on Volkswagen's board, said Friday the investigations into the company shouldn't turn in to a campaign against the industry as a whole.

Philippe Lamberts, co-chair of the Greens group in the European Parliament, said the auto industry had to change.

"They should shut up and put up with it. It's not a question of profits, it's about health, it's about the rule of law," he told Reuters.

Jos Dings, director of campaign group Transport & Environment, said the EU should set up a new Europe-wide vehicle inspection agency akin to the EPA, but wasn't optimistic.

"Member states will try their utmost to keep that power with their national type approval authorities -- despite the fact that it is clear they have not done much more than indeed approve vehicles," he said.

-Additional reporting by Alexandria Sage in San Francisco, Tom Bergin in London and Reuters bureaus in Europe and the United States.
Read Full Story

People are Reading