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  1. Kenneth Feinberg is still hard at work on developing a compensation plan for TDI owners in the U.S. affected by the diesel emission scandal. But in an interview with German newspaper Frankfurter Allgemeine Sonntagszeitung, Feinberg says "there will be a generous solution." Now what that solution will end up being is unknown at this time. Part of the problem is Feinberg has his hands tied as Volkswagen and the EPA/CARB are still working on trying to figure out a fix for the 2.0L TDI engine. "..my hands are tied, while VW and the authorities do not resolve their differences. The original time frame could be delayed, therefore." The other problem is trying to figure out what an appropriate compensation will look like. “The jury is still out, and at the moment all options are up for debate: cash payments, buybacks, repairs, replacements with new cars,” said Feinberg. Not helping matters are the different generations of the engine in question - the EA189. One generation of the engine might have a different program than the other. Feinberg believes that once the compensation program comes online, most owners will take advantage of it. "When funds for the victims of September 11, 97 percent of claimants have accepted my offer. If GM and BP were also more than 90 percent. This must also be the target for VW." Source: Frankfurter Allgemeine Sonntagszeitung, Reuters
  2. The emission cheating that went back to 2006 and would land Volkswagen in deep trouble last September was an open secret in the automaker's engine development department. German newspaper Sueddeutsche Zeitung along with regional broadcasters NDR and WDR reported on Friday some of the results of Volkswagen's internal investigation into the diesel cheating scandal. The cheating goes back to 2006 at Volkswagen's engine development department. With strict U.S. emissions standards looming, the department was given an impossible task; find a cost effective solution to develop clean diesel engines. Pressure from the board and fear of telling their bosses that it could not be done only added to fire of going with cheating. "Within the company there was a culture of 'we can do everything', so to say something cannot be done, was not acceptable," said Sueddeutsche Zeitung in its report (and translated by Reuters). Thus, the decision was made the development team to commit fraud to meet this impossible task. Sueddeutsche Zeitung says the cheating began in earnest in November 2006 and the staff took solace that regulators would not be able to detect the cheating with regular testing methods. The cheat was an open secret to those in the department. That doesn't mean someone tried to speak out. The report says in 2011, a whistleblower who was involved in the deception, told a senior manager outside the department about the cheating. The manager reportedly did nothing. A Volkswagen spokesman declined to comment on what he called 'speculation'. Source: Sueddeutsche Zeitung, Reuters
  3. When information first broke out that Volkswagen was using illegal software to fool emission testing equipment on their diesel vehicles, questions arose of whether or not other automakers are doing the same thing. Belgian news site VRT News alleges that Opel is secretly updating the emission control software in the Zafira 1.6 diesel by saying it's only a software update. This vehicle has been the target of various environmental groups as being one of the dirtiest vehicles. VRT News tested two Zafiras - with and without the update - and found the update cut emissions by more than half in one and by three-quarters in another. In their report, VRT News said dealers originally acknowledged the update was for cutting back on emissions. But later footage taken by hidden camera shows dealers aren't admitting the update is for emissions. Opel has issued a statement this week strongly denying they changing the emission levels, saying the update in question has nothing to do with adjusting emissions. Source: VRT News, Opel Press Release is on Page 2 Statement on claims of VRT News, Belgium Rüsselsheim. Opel clearly rejects the claim of VRT News that Opel dealers have been modifying software in the Zafira Tourer 1.6 diesel that changes the emission behavior of these vehicles. 15-P-044, the service update mentioned, has nothing to do with changing emission levels. In addition, no other recalls to achieve better emission values have been launched in 2015. Service update 15-P-044 has been discussed with the German Type Approval Authority KBA. The testing of vehicle emissions is a very complex topic. The data provided by “Emissions Analytics” does not give us enough information on, for example, their NEDC test execution and RDE tests to understand their results fully. We also need more information on the history of the test vehicle itself. “Emissions Analytics” admit in their report that their tests might deviate from regulated tests. As highlighted many times in recent months, we reaffirm that we do not deploy any software that recognizes if the car is undergoing an exhaust emissions test. In addition, Opel announced in December that the company is voluntarily taking the next step to meet future emissions guidelines, both on CO2 and NOx. From mid-summer 2016, and in addition to the official fuel consumption and CO2 information, fuel consumption figures recorded under the WLTP (“Worldwide Harmonized Light Duty Vehicles Test Procedure”) cycle will also be published. In addition, Opel engineers have recently started working on an initiative to implement NOx emission improvements on SCR (Selective Catalytic Reduction) diesel applications. This is a voluntary and early improvement towards the so-called RDE (Real Driving Emissions) legislation that goes into effect in 2017. Opel puts its focus on the customer and on ensuring clarity and transparency.
  4. It was expected that Volkswagen would begin repairing diesel vehicles with the illegal software in the first few months of 2016. But after the California Air Resources Board rejected Volkswagen's fix this week, the timeframe for when vehicles will be fixed is unknown. On Tuesday, CARB said Volkswagen plan were "incomplete, substantially deficient and fall far short of meeting the legal requirements to return these vehicles” to compliance. Speaking at the Automotive News World Congress, Chris Grundler, director of the EPA’s Office of Transportation and Air Quality said his team agreed with CARB's decision. “Both CARB and EPA continue to insist on an expeditious fix that will not only bring these vehicles into compliance but also do so in a way that doesn’t create any adverse impacts for owners. We’re not there yet,” said Grundler. Grundler went on to say Volkswagen's proposal fell short in a number of areas and that more effort is needed. “I do want to say that this is not a political matter. It’s a serious matter, the deficiencies cover a range of areas. I would not characterize it as dotting i’s or crossing t’s. We agreed with CARB’s assessment … but we’re going to keep talking.” Grundler's comments came before a meeting between EPA Administrator Gina McCarthy and Volkswagen CEO Matthias Mueller and brand chief Herbert Diess to work out a deal on a possible fix. The two parties emerged without a deal, but both were very appreciated about the meeting and work towards a fix would continue. Source: Automotive News (Subscription Required)
  5. Volkswagen has found itself in hot water once again over the diesel scandal. In an interview with NPR before the Detroit Auto Show, CEO Matthias Mueller said the company didn't lie to the EPA. The company just misunderstood the law. Here is the exchange After this interview was aired on NPR, Volkswagen asked if it would be possible to do a do-over. NPR agreed and did another interview with Muller. This time, Muller clarified some of his earlier comments, adding this was a problem that has existed in Volkswagen for ten years. “We had the wrong reaction when we got information year by year from the EPA and from the [California Air Resources Board]. We have to apologize for that, and we’ll do our utmost to do things right for the future.” Source: NPR
  6. You would think the last thing anyone Volkswagen wants to admit is they still believe there is a place for their diesel vehicles in the U.S. Alas, Volkswagen's brand chief thinks differently. Herbert Diess told reporters at the Consumer Electronics Show that Diesels will still have a place in Volkswagen's U.S. lineup, despite the mess the company finds itself in. “I wouldn’t give up diesel, even in the U.S.,” said Diess. Diess pointed that with the latest emission technologies, diesels can be clean. He was also quick to point to the long range and high torque figures. At the moment, Volkswagen is trying to get approval from U.S. regulators to fix the nearly 600,000 vehicles fitted with the illegal software that was designed to cheat emission tests. Since Volkswagen sent their plan to fix the illegal vehicles in November, they have been in talks with the EPA and CARB. It appears the talks are at a stalemate. “So far, recall discussions with the company have not produced an acceptable way forward. These discussions will continue in parallel with the federal court action,” said Cynthia Giles, assistant administrator for the EPA’s Office of Enforcement in a statement announcing the lawsuit against Volkswagen early this week. Source: Automotive News (Subscription Required)
  7. The U.S. Department of Justice has filed a civil suit against Volkswagen today for allegedly violating the Clean Air Act by using illegal cheating devices on nearly 600,000 diesel vehicles. "The United States will pursue all appropriate remedies against Volkswagen to redress the violations of our nation's clean air laws," said Assistant Attorney General John Cruden. A senior official at the Department of Justice tells Reuters the penalties in the lawsuit could cost the German automaker billions of dollars. The official also says the suit doesn't preclude the Justice Department from filing criminal charges against Volkswagen. The suit will be filed in the Eastern District of Michigan, before heading to Northern California where the class-action lawsuits will be heard. UPDATE: Volkswagen has issued a statement after the lawsuit was filed. "Today, the United States Department of Justice, on behalf of the U.S. Environmental Protection Agency (EPA) filed a civil lawsuit against Volkswagen, Audi and Porsche in the United States District Court for the Eastern District of Michigan. The claims in the Complaint pertain to the 2.0L and 3.0L TDI engine equipped vehicles that have been the subject of EPA investigations and allege violations of the same provisions of the Clean Air Act as were noted in the EPA’s September 18 and November 2 Notices of Violation. Volkswagen will continue to work cooperatively with the EPA on developing remedies to bring the TDI vehicles into full compliance with regulations as soon as possible. In addition, we are working with Kenneth Feinberg to develop an independent, fair and swift process for resolving private consumer claims relating to these issues. We will continue to cooperate with all government agencies investigating these matters." We also have a total amount of penalties that Volkswagen could be facing. In the suit, U.S. environmental officials are asking for these penalties to be applied, $37,500 for each Volkswagen diesel vehicle that emits more than the legal limit of emissions $37,500 for each Volkswagen diesel vehicle that was 'tampered' Up to $3,750 for each defeat device Up to $37,500 for each day since 2009 that Volkswagen violated the Clean Air Act Add it all up and Volkswagen could be looking at a maximum of $40 billion in fines. Source: Reuters, U.S. Department of Justice Press Release is on Page 2 United States Files Complaint Against Volkswagen, Audi and Porsche for Alleged Clean Air Act Violations The Department of Justice, on behalf of the Environmental Protection Agency (EPA), today filed a civil complaint in federal court in Detroit, Michigan, against Volkswagen AG, Audi AG, Volkswagen Group of America Inc., Volkswagen Group of America Chattanooga Operations LLC, Porsche AG and Porsche Cars North America Inc. (collectively referred to as Volkswagen). The complaint alleges that nearly 600,000 diesel engine vehicles had illegal defeat devices installed that impair their emission control systems and cause emissions to exceed EPA’s standards, resulting in harmful air pollution. The complaint further alleges that Volkswagen violated the Clean Air Act by selling, introducing into commerce, or importing into the United States motor vehicles that are designed differently from what Volkswagen had stated in applications for certification to EPA and the California Air Resources Board (CARB). “Car manufacturers that fail to properly certify their cars and that defeat emission control systems breach the public trust, endanger public health and disadvantage competitors,” said Assistant Attorney General John C. Cruden for the Justice Department’s Environment and Natural Resources Division. “The United States will pursue all appropriate remedies against Volkswagen to redress the violations of our nation’s clean air laws alleged in the complaint.” “With today’s filing, we take an important step to protect public health by seeking to hold Volkswagen accountable for any unlawful air pollution, setting us on a path to resolution,” said Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance. “So far, recall discussions with the company have not produced an acceptable way forward. These discussions will continue in parallel with the federal court action.” “Today’s complaint is the first stage in bringing Volkswagen to justice for failing to disclose the defeat device while seeking certification for its diesel vehicles from EPA’s Office of Transportation and Air Quality in Ann Arbor, Michigan,” said U.S. Attorney Barbara L. McQuade for the Eastern District of Michigan. “The alleged misrepresentations allowed almost 600,000 diesel engines to emit excessive air pollution across the country, harming our health and cheating consumers.” Consistent with EPA’s Notices of Violation, issued on Sept. 18, 2015, for 2.0 liter engines and Nov. 2, 2015 for certain 3.0 liter engines, the complaint alleges that the defeat devices cause emissions to exceed EPA’s standards during normal driving conditions. The Clean Air Act requires vehicle manufacturers to certify to EPA that their products will meet applicable federal emission standards to control air pollution. Motor vehicles equipped with illegal defeat devices cannot be certified. The complaint alleges that Volkswagen equipped certain 2.0 liter vehicles with software that detects when the car is being tested for compliance with EPA emissions standards and turns on full emissions controls only during that testing process. During normal driving situations the effectiveness of the emissions control devices is greatly reduced. This results in cars that meet emissions standards in the laboratory and at the test site, but during normal on-road driving emit oxides of nitrogen (NOx) at levels up to 40 times the EPA compliance level. In total, the complaint covers approximately 499,000 2.0 liter diesel vehicles sold in the United States since the 2009 model year. The complaint further alleges that Volkswagen also equipped certain 3.0 liter vehicles with software that senses when the vehicle is undergoing federal emissions testing. When the vehicle senses the test procedure, it operates in a “temperature conditioning” mode and meets emissions standards. At all other times, including during normal vehicle operation, the vehicles operate in a “normal mode” that permits NOx emissions of up to nine times the federal standard. In total, the complaint covers approximately 85,000 3.0 liter diesel vehicles sold in the United States since the 2009 model year. NOx pollution contributes to harmful ground-level ozone and fine particulate matter. These pollutants are linked with asthma and other serious respiratory illnesses. Exposure to ozone and particulate matter is also associated with premature death due to respiratory-related or cardiovascular-related effects. Children, the elderly and people with pre-existing respiratory disease are particularly at risk of health effects from exposure to these pollutants. Recent studies indicate that the direct health effects of NOx are worse than previously understood, including respiratory problems, damage to lung tissue and premature death. Today’s filing of a civil complaint under Sections 204 and 205 of the Clean Air Act seeks injunctive relief and the assessment of civil penalties. A civil complaint does not preclude the government from seeking other legal remedies. The United States will seek to transfer its case and fully participate in the pretrial proceedings now initiated in the related multi-district litigation in the Northern District of California. The United States’ investigation is ongoing, in close coordination with CARB. EPA and CARB have been in active discussion with Volkswagen about potential remedies and recalls to address the noncompliance, and those discussions are ongoing. Affected 2.0 liter diesel models and model years include: Jetta (2009-2015) Jetta Sportwagen (2009-2014) Beetle (2013-2015) Beetle Convertible (2013-2015) Audi A3 (2010-2015) Golf (2010-2015) Golf Sportwagen (2015) Passat (2012-2015) Affected 3.0 liter diesel models and model years include: Volkswagen Touareg (2009-2016) Porsche Cayenne (2013-2016) Audi A6 Quattro (2014-2016) Audi A7 Quattro (2014-2016) Audi A8 (2014 – 2016) Audi A8L (2014-2016) Audi Q5 (2014-2016) Audi Q7 (2009-2015)
  8. Continental AG's CEO says the diesel scandal that Volkswagen finds itself embroiled in could kill the marketplace for diesel vehicles in China, Japan, and United States. Elmar Degenhart tells German publication Boersen-Zeitung, "The diesel passenger car could sooner or later disappear from these markets." Degenhart also revealed that diesel had a market share of only 1 to 3 percent in these countries. This pales in comparison to Europe where diesels make up 53 percent of the market. Interestingly, the diesel scandal hasn't affected sales of diesel vehicles in Europe or the U.S. according to Continental's finance chief last month. Source: Boersen-Zeitung via Reuters
  9. The California Air Resources Board (CARB) has given Volkswagen a reprieve on the diesel emission scandal. According to Reuters, CARB has extended the deadline to approve or reject Volkswagen's fix for the nearly 500,000 vehicles with the cheating 2.0L TDI to January 14, 2016. The reason for the extension is Volkswagen continued to submit "significant information and data" about the repair effort for the affected models since submitting the proposed fix back on November 20th. VW spokeswoman Jeannine Ginivan tells Reuters the German automaker continues "to fully cooperate with EPA and CARB as we work to develop an approved remedy as quickly as possible." Volkswagen has said previously that newer TDI vehicles will need only a software upgrade to fix the issue, while older models might need some new equipment to go along with the upgrade. Source: Reuters, CARB Press Release is on Page 2 UPDATE: CARB sends VW letter on proposed recall plan CARB to act on or before January 14, 2016 SACRAMENTO - As the result of submissions by VW over the past week, CARB sent VW America a letter indicating that it would act on the proposed recall plan on or before January 14, 2016. The letter follows below, and can be found at: http://www.arb.ca.gov/msprog/vw_info/vw_diesel_info.htm ~~~~~~~~~~~~~~~~~~~~~~~ December 18, 2015 David GeanacopoulosExecutive Vice President Public Affairs and General Counsel Volkswagen Group of America, Inc.2200 Ferdinand Porsche Drive Herndon, Virginia 20171David.Geanacopoulos@vw.com Subject: Volkswagen 2.0 L Recall Plan Submission Dear Mr. Geanacopoulos: As a result of Volkswagen Group of America's (VW) continued submission of additional significant information and data to the California Air Resources Board (CARB) as part of VW's proposed 2.0L influenced emission recall plan (Title 13, Cal. Code Regs. § 2113) --- including information VW submitted in writing on December 14, 2015, and verbally as recently as December 16, 2015 --- CARB plans to act on your proposed 2.0L influenced emission recall plan on or before January 14, 2016. Mr. Stuart Johnson, on behalf of VW, discussed this issue with me earlier this week. Please confirm in writing to me, no later than noon Pacific Time, Monday, December 21, 2015, that VW has no objection to CARB's planned response date of on or before January 14, 2016. As you know, VW submitted a December 15, 2015, request for an extension to submit VW's supplemental, proposed 2.0L influenced emission recall plan to CARB. CARB will also respond to this extension request on or before January 14, 2016. If you have any questions, I can be reached at (626) 450-6150. Sincerely, Annette Hebert, Chief Emissions Compliance, Automotive Regulations, and Science Division
  10. Kenneth Fineberg finds himself helping out another automaker in crisis. Volkswagen announced yesterday they have brought in Fienberg to work on and oversee a new claims program for owners of Volkswagen models involved in the diesel emission scandal. “We are pleased to announce the retention of Kenneth Feinberg. His extensive experience in handling such complex matters will help to guide us as we move forward to make things right with our customers,” said Michael Horn, President and CEO, Volkswagen Group of America in a statement. Automobile Magazine was on a conference call with Feinberg to discuss his involvement and plans. Fineberg made it clear this was going to be a tough task as he'll have to figure out what is a legitimate claim and what is the appropriate remedy for those who apply in the program. "The issues are always the same: Who's eligible to file a claim? What is the remedy? What are the proof requirements when somebody commits a claim?" said Feinberg. "What is an appropriate remedy that would give the car owner total peace. And that is a very, very challenging question which we certainly can't answer yet." Feinberg said on the call he expects as many as 500,000 potential claimants in the U.S. The hope for this program is to consolidate the number of lawsuits against Volkswagen. At the moment, there are more 500 lawsuits against Volkswagen that are related to the diesel emission scandal. Feinberg didn't give a timeline as to when we could see a claims program go live. "This is going to take some time. But we'll begin as soon as possible," said Feinberg. Before being brought in by Volkswagen, Feinberg was the administrator for General Motors' ignition switch compensation fund for victims and family of victims. Under his watch, the fund determined that 124 people were killed by the ignition switch turning off unexpectedly and causing the car to lose power. The fund also determined that 275 people were injuried because it. Source: Automobile Magazine, Volkswagen Press Release is on Page 2 Volkswagen Announces Engagement of Kenneth R. Feinberg to Design and Administer a Claims Program Related to the TDI Emissions Compliance Issue Herndon, VA (December 17, 2015) Volkswagen announced today that it has retained attorney Kenneth R. Feinberg, managing partner of The Law Offices of Kenneth R. Feinberg, PC, to design and administer an independent claims resolution program to address claims related to the 2.0L and 3.0L TDI vehicles affected by the emissions compliance issue. Volkswagen believes Mr. Feinberg will develop an independent, fair and swift process for resolving these claims. “We are pleased to announce the retention of Kenneth Feinberg. His extensive experience in handling such complex matters will help to guide us as we move forward to make things right with our customers,” said Michael Horn, President and CEO, Volkswagen Group of America. Mr. Feinberg stated that he will “commence work immediately designing an independent claims process that will meet claimants’ needs.” He added that “we hope to have a claims program designed as expeditiously as possible. In order to do so, we will need the input not only of Volkswagen, but also vehicle owners, their lawyers, and other interested parties.” Mr. Feinberg is a well-respected attorney with extensive experience managing high-profile issues and many of the nation’s most challenging legal matters. He was appointed to two presidential commissions by Presidents Reagan and Clinton and administered several other significant programs. More information on Kenneth Feinberg can be found at http://feinberglawoffices.com/ Volkswagen continues to fully cooperate with the U.S. Environmental Protection Agency (EPA) and the California Air Resources Board (CARB) as the Company works to develop approved remedies for the affected TDI vehicles as quickly as possible. As the claims program is developed, Mr. Feinberg will consult these agencies for their input. For more information regarding the Volkswagen TDI emissions compliance issue, please visit www.vwdieselinfo.com
  11. German authorities will put Volkswagen's fixes for diesel emissions to the test. German newspaper Die Welt reports that the German Transportation Authority will take Volkswagen vehicles affected by the diesel cheating scandal and perform emission and fuel usage testing once the company begins doing the fixes. Die Welt goes on to say that the test results and raw data will be published in full to guarantee transparency. No word as to when the re-tests would be carried out. Volkswagen says vehicles in Europe only need a software upgrade and a new mesh filter to be placed in front of the vehicle's air mass sensor. Source: Reuters
  12. This morning at Volkswagen's headquarters in Wolfsburg, Germany, executives admitted there were parts of the company "tolerated breaches of rules" and would be 'relentless' in finding those involved in the diesel emission scandal. Volkswagen Chairman Hans Dieter Pötsch told reporters at the press conference that investigations into the affair were going well, but it would take time for the investigation to figure out which individuals were the key players. Poestch also reiterated that a small group of individuals were involved in the cheating. The key question is how did the cheating happen in the first place? Poetsch explained there were three key reasons, “Mindset in some areas of the Company that tolerated breaches of rules.” Misconduct of individuals Flaws in processes that prevent issues like this "It is clear that, in the past, deficiencies in processes have favored misconduct on the part of individuals. This is true, for example, for test and certification processes affecting our engine control devices, which were not suited to preventing use of the software in question. Group Audit has suggested specific remedies to correct this. We are concentrating on structuring these processes more transparently and systematically. For example, in the future, software for engine control devices will be developed more strictly in accordance with the 4-eyes principle. In addition, the bodies responsible for the release of such software are being reorganized," Volkswagen said in a statement. Aside from an internal investigation, Volkswagen has also brought in the law firm Jones Day to do an external investigation. The firm is expected to present the results of their investigation in April during Volkswagen' annual meeting. Volkswagen CEO Matthias Mueller also spoke at the conference and announced that changes were coming to how Volkswagen corporate structure will look like. Muller is also committed to keeping the twelve brands and protecting jobs. "We will not allow the crisis to paralyze us. Although the current situation is serious, this company will not be broken by it," said Muller. Source: Automotive News (Subscription Required), Jalopnik, Volkswagen Press Release is on Page 2 Volkswagen making good progress with its investigation, technical solutions, and Group realignment Initial results of the emissions investigation available Approximately 450 external and internal experts involved in the investigations 100 terabytes of data secured – equivalent to information in approximately 50 million books Volkswagen will have future emissions tests evaluated independently Technical solutions for customers in Europe developed; implementation to begin in January 2016 Group realignment making good progress The Volkswagen Group’s realignment is well underway. The Group is making progress on all five of the priorities it set at the end of October: The technical solutions for customers in Europe have been devised, presented to the authorities, and positively evaluated by them. These solutions will begin to be implemented in January 2016. The emissions investigation is producing results, and initial consequences have already been drawn based on the findings to date. The implementation of the new structure is proceeding according to plan, and the process of developing a new strategy has commenced. The Chairman of the Supervisory Board of Volkswagen AG, Hans Dieter Pötsch, told the press in Wolfsburg today: “The Volkswagen Group is fully functional in every respect, even during these eventful days. How, and when we meet the current challenges is primarily – although not solely – up to us. In order to pass this test, we must make an enormous, common effort – and we are all ready to do so.” The Chairman of the Board of Management, Matthias Müller, said: “We are doing everything to overcome the current situation, but we will not allow the crisis to paralyze us. On the contrary, we will use it as a catalyst to make the changes Volkswagen needs.” For the first time, the Company provided detailed commentary on the status of its investigation, which is being coordinated by a special committee of the Supervisory Board. Approximately 450 internal and external experts are involved in the investigations, which are being conducted in two phases. An internal review, being conducted by a task force of experts from various Group companies with a clearly defined mandate and a deadline, is focused on the mandate to Group Audit by the Supervisory Board and the Management Board to investigate relevant processes, reporting and monitoring systems, and the associated infrastructure. Group Audit will provide its findings to the external experts of Jones Day. The Supervisory Board has given this internationally respected law firm a parallel mandate to completely clarify the facts and responsibilities – i.e., among other things, it has been asked to conduct a forensic investigation. In connection with its work, Jones Day is being provided with operational support by the audit firm Deloitte. Group Audit has identified process weak points As reported on Wednesday, extensive internal investigations, which were subject to external independent review, did not confirm the suspicion of irregularities during the CO2 certification process. Now, the first significant findings in the investigation of the nitrogen oxide (NOx) issue are available. Group Audit’s examination of the relevant processes indicates that the software-influenced NOx emissions behavior was due to the interaction of three factors: The misconduct and shortcomings of individual employees Weaknesses in some processes A mindset in some areas of the Company that tolerated breaches of rules. It is clear that, in the past, deficiencies in processes have favored misconduct on the part of individuals. This is true, for example, for test and certification processes affecting our engine control devices, which were not suited to preventing use of the software in question. Group Audit has suggested specific remedies to correct this. We are concentrating on structuring these processes more transparently and systematically. For example, in the future, software for engine control devices will be developed more strictly in accordance with the 4-eyes principle. In addition, the bodies responsible for the release of such software are being reorganized. They will be given more sharply defined and binding powers and responsibilities. Deficiencies were also found in reporting and monitoring systems. The main problem there was that responsibilities were not sufficiently clear. Volkswagen will now further sharpen them. Group Audit also found deficiencies in some areas of Volkswagen’s IT infrastructure. These deficiencies will also be remedied. Volkswagen will introduce IT systems that allow individual processes to be monitored with greater efficiency and transparency. This will simultaneously reduce our dependence on individuals when problematic processes have to be identified and, if necessary, escalated. As Pötsch stated: “Group Audit’s investigation is producing valuable findings, which will help us create a structure that, rather than favoring breaches of regulations, will prevent them, or at least allow them to be detected early on.” The Company has already drawn a key conclusion based on Group Audit’s findings, namely that its testing practice must undergo comprehensive changes. Volkswagen has decided that in the future emissions test will be evaluated externally and independently. In addition, randomly selected real-life tests to assess emissions behavior on the road will be introduced. Chairman of the Supervisory Board Pötsch stated: “We hope that this will help Volkswagen regain lost trust.” More time is required for the external investigation Although Group Audit’s analysis of the processes will be concluded shortly, Jones Day will need well into next year in order to finish its work. The external investigators will need more time for their investigation, for two reasons. The first is that they have a massive volume of data to screen. At present, 102 terabytes of information have been secured, which is the equivalent of the information contained in approximately 50 million books. More than 1,500 electronic data storage units have been collected from approximately 380 employees. The second reason is that their investigation of the facts takes legal responsibility into account. Therefore, their findings must not only be plausible and consistent, but must also hold up in court. Volkswagen plans to provide a status update on the external investigation at its Annual General Meeting on April 21, 2016. The information that has been screened to date has largely explained the origin and development of the nitrogen oxide issue. It proves not to have been a one-time error, but rather a chain of errors that were allowed to happen. The starting point was a strategic decision to launch a large-scale promotion of diesel vehicles in the United States in 2005. Initially, it proved impossible to have the EA 189 engine meet by legal means the stricter nitrogen oxide requirements in the United States within the required timeframe and budget. This led to the incorporation of software that adjusted nitrogen oxide emission levels according to whether vehicles were on the road or being tested. Later, when an effective technical process was available to reduce NOx emissions, it was not employed to the full extent possible. On the contrary, the software in question allowed the exhaust gas treatment additive “AdBlue” to be injected in variable amounts such that the NOx values were particularly low when vehicles were in the test bay, but significantly higher when vehicles were on the road. Hans Dieter Pötsch stressed that, “No business transaction justifies overstepping legal and ethical bounds.” As a first step, nine managers who may have been involved in the manipulations were suspended. Pötsch emphasized: “I here and now guarantee that we will pursue our thorough investigation to its conclusion. I vouch for this personally, as does the entire Supervisory Board of Volkswagen AG.” Technical solutions, which have been positively evaluated by the German Federal Motor Transport Authority (“Kraftfahrtbundesamt”), are now available for the European variants of the EA 189 engine type affected. Volkswagen is thus ensuring that the models affected in Europe will meet all legal requirements in the future. The costs of implementing these solutions will be manageable in technical, manufacturing, and financial terms. The software of the 2.0 and 1.2 liter TDI will be updated. For the 1.6 liter TDI, a so-called flow transformer will be used that increases the measurement precision and, in combination with redesigned software, will optimize injection quantity. Now that the technical solutions have been approved, Volkswagen is working intensely on plans to implement them. The recall of the highest-volume variant, the 2.0 liter TDI, will begin in January 2016. The recall of the 1.2 liter TDI is currently scheduled to begin in the second quarter. The implementation phase for the 1.6 liter models is planned to begin in the third quarter to allow time to prepare for the hardware modification. Under the current plan, the entire initiative will take at least all of calendar year 2016. Matthias Müller, Chairman of the Board of Management, promised: "Volkswagen will not rest until this matter has been resolved once and for all to our customers’ satisfaction.” Volkswagen will inform the owners of the affected vehicles individually as to when their vehicles will be updated. Volkswagen guarantees that the solutions will be implemented free of charge. The company waives any statute of limitations for the technical solutions, and will provide an appropriate replacement vehicle if required. Due to far stricter nitrogen oxide limits in the United States, it is a greater technical challenge to retrofit the vehicles such that all applicable emissions limits can be met with one and the same emissions strategy. To this end, Volkswagen is cooperating closely with the United States Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). The solution designed for North America will be presented as soon as it has been approved by the responsible authorities. Implementation of the new Group structure commenced Parallel to overcoming the crisis, Volkswagen is also instituting a comprehensive new alignment that affects the structure of the Group, as well as its way of thinking and its strategic goals. Volkswagen will be managed in a more decentralized fashion in the future, and its brands and regions will be granted more independence. The Group’s Board of Management is fully focused on its core task: advancing the major, global issues for the future, as well as synergies, controls, and strategy. Volkswagen will have significant input to the technical changes that have a major impact on its own business model, becoming more agile, and streamlining its decision-making processes. In addition, Volkswagen will become leaner and improve cost efficiency. All these structural changes ultimately aim to reduce managerial complexity and ensure that the Group can be effectively led over the long term. At an organizational level, with the appointment of Dr. Christine Hohmann-Dennhardt, the Integrity & Law area will be represented as its own department on the Group’s Board of Management in the future – a clear indication that these issues are extremely important to Volkswagen. Significantly more importance will be attached to digitalization, which will report directly to the Chairman of the Board of Management. Overall, direct reports will be reduced from more than 30 to 19. The renewal of personnel in the Group has recently again been given new impetus. Since the beginning of 2015, the Group’s Board of Management has seen six new members join, seven of the brands have had their top personnel changed, and eight departments falling within the CEO’s area of responsibility now have new heads. Müller stated: "The team with which we wish to address the challenges of the coming months and years is in place.” The details of the new structure are to be worked out in the first quarter of 2016. The new structure will be in place Group-wide by the start of 2017. New mindset initiated Müller noted: “We can have the best people, and a great organization, but we can do nothing without the right attitude and mentality.” During the upcoming process of change toward a new way of thinking, Volkswagen can build on its traditional strengths: quality consciousness, strong identification with its vehicles, and a high degree of social responsibility. According to Müller, the future will be about more open discussions, closer cooperation, and a willingness to allow mistakes if they are understood as an opportunity to learn. The Chairman of the Board of Management stated, “We don’t need yes-men, but managers and engineers who make good arguments in support of their convictions and projects, who think and act like entrepreneurs. I am calling for people who are curious, independent, and pioneering. People who follow their instincts and are not merely guided by the possible consequences of impending failure. In short: the future at Volkswagen belongs to the bold. We need a little more Silicon Valley, coupled with the competence from Wolfsburg, Ingolstadt, Stuttgart, and the other Group locations.” New strategic destination under development In addition, Volkswagen has initiated development of a new strategic target: “Strategy 2025”, with which Volkswagen will address the main issues for the future, is scheduled to be presented in mid 2016. Müller explained, “We are realigning Volkswagen strategically and technologically. Our goal is to courageously and decisively participate in shaping the future of mobility.” Among other things, the Group aims to achieve a significant expansion of its sales outside of its current core business. Furthermore, a digitalization and an electrification offensive are being prepared. In parallel, Volkswagen is currently doing everything it can to limit the effect the current situation has on its business performance. The operating business is meeting expectations, and the 2015 annual forecast, which was updated at the end of October, remains unchanged. The sales figures are very mixed as regards the various markets and brands. Müller explained, “Overall, the situation is not dramatic, but, as was to be expected, it's tense.” In summary, the Chairman of the Board of Management stated: “Although the current situation is serious, this company will not be broken by it. We have a clear mission: we will create a new, better, and stronger Volkswagen. A company that uses its strengths to make the transition to the new world of automobiles. A company that now releases new forces, and takes better advantage of its huge potential. And, last but not least, a company that will be successful over the long term on the basis of strong values.”
  13. Volkswagen's dealers find themselves wondering what's next and if the diesel scandal would end. Dealers seemed hopeful when the initial fallout came as Volkswagen seemed to understand what could happen. The German automaker offered emergency aid to its dealers which earned Volkswagen of America's CEO Michael Horn a standing ovation at Volkswagen's national meeting. But three months on and a scandal that seems to go in a new direction every day, dealers are becoming worried and frustrated. "This thing isn't getting better with time. We don't have a fix. We don't have a timeline," said Alan Brown, chairman of VW's dealer council. The unknown, he added, is "what makes the anxiety of this even worse." Part of worrying feelings that dealers are the confusing signals coming out at Volkswagen. The internal probe hasn't revealed any details about who was involved or how it began. Not helping is the constant changes in Volkswagen's executives. Meanwhile in the U.S., Volkswagen is currently waiting on the EPA and CARB to approve their fix for the 2.0L TDI engine. Not helping is the uncertainty in the values of affected Volkswagen diesel models. Competing brands won't accept used TDIs on trade, and Volkswagen dealers feel pressure to take in TDI models at lower prices to reflect there more than 15 percent drop in price at auctions. Customers who are trying to trade in their TDIs are seeing offers that leave them discouraged. Volkswagen's offer to buy up used TDIs sitting on dealers lot turned out to be a one-time program that ended on October 22nd. Also giving Volkswagen dealers a bit of a headache is the low inventories of gas vehicles. Steve Kalafer, owner of a Volkswagen dealer in New Jersey says he has fewer than 50 saleable Volkswagens in stock, causing him to say his sales prospects in December are bleak. "We would be hopeful that Volkswagen would ship these cars on overtime," Kalafer said, but during the holiday season, "the auto business from the manufacturer side basically shuts down." There is also the question of incentives. One of the reasons for Volkswagen's 25 percent drop in sales in November was the decrease in incentives. In October, VW offered $2,000 for returning owners. In November, that amount was reduced to $1,000 to $1,500 dependent on the model. Brown says Horn should be demanding money from Volkswagen to offer the best new car deals in the industry to keep and attract customers. "We cannot be arrogant and higher priced," said Brown. Source: Automotive News (Subscription Required)
  14. To shoulder the massive costs that will come from the diesel emission scandal, Volkswagen has agreed to terms to take out a 20 billion euro (about $21 billion) bridging loan with a number of banks. Sources tell Reuters the decision to go with a number of banks allows Volkswagen to spread the debt out and that the company hopes to start paying back the loans next year by issuing bonds in the company. A few weeks ago, we heard rumors that Volkswagen was planning to take out 20 billion Euros in short-term loans to act as a buffer for upcoming fines. But since that report, the news has only gotten worse. Volkswagen has admitted that 430,000 vehicles in Europe have "implausible" CO2 figures and prosecutors have opened an investigation into possible tax evasion in connection with the problem (CO2 emissions are taxed in Europe). Then Volkswagen admitted that the 3.0L TDI V6 used in a number of vehicles in U.S. had illegal software that wasn't revealed to the EPA. Finally this week, the German Transport Authority deemed the software Volkswagen uses in their diesel vehicles is illegal. Along with the loans, Volkswagen is considering all options of raising funds internally. Such items include cutting back on their development budget and possibly closing the Dresden factory where the Phaeton. But there is also the possibility of Volkswagen selling off some its assets to bring in more money. Source: Reuters, 2
  15. Dr. Ulrich Hackenberg, head of Audi's r&d has stepped down today. Hackenberg has been a key presence at Audi and the Volkswagen group since he joined in 1985. He has played a major role in a number of projects including the first-generation Audi TT, Volkswagen XL1, and the MQB modular platform. In 2013, he was named the head of Audi's r&d division. Hackenberg made headlines back in September as he and two other r&d heads at Volkswagen - Porsche's Wolfgang Hatz and Volkswagen's Heinz-Jakob Neusser - were suspended for possible involvement in the diesel scandal. “In the 30 years that he was active in the Volkswagen Group, Ulrich Hackenberg was involved in crucial strategies and model decisions. The highly flexible modular system resulted in flexible modular production. Both systems helped us to produce very efficiently and with high quality. Numerous car models from Audi, Volkswagen and Bentley were significantly affected by his commitment and expertise. On behalf of the entire Board of Management, I thank him for his many years of commitment and his professional passion,” said Audi’s Board of Management Chairman Rupert Stadler. Hackenberg's successor is Stephan Knirsch, currently the head of engine development at Audi. Source: Audi Press Release is on Page 2 Dr. Ulrich Hackenberg has reached a mutual agreement with the Supervisory Board of AUDI AG to step down as Member of the Board of Management for Technical Development. The new Chairman of the Audi Supervisory Board, Matthias Müller, praised Hackenberg’s significant impact on the Technical Development divisions of the entire Volkswagen Group: “Above all, the modular toolkit system is inseparably connected with the name of Ulrich Hackenberg. He had that idea already in the early nineties at Audi. Today, the entire Group profits from it.” Audi’s Board of Management Chairman Rupert Stadler underscored his lifetime achievements: “In the 30 years that he was active in the Volkswagen Group, Ulrich Hackenberg was involved in crucial strategies and model decisions. The highly flexible modular system resulted in flexible modular production. Both systems helped us to produce very efficiently and with high quality. Numerous car models from Audi, Volkswagen and Bentley were significantly affected by his commitment and expertise. On behalf of the entire Board of Management, I thank him for his many years of commitment and his professional passion.” After graduating in mechanical engineering at Aachen RWTH University, Ulrich Hackenberg was employed as an assistant at the Institute for Motor Transport from 1978 until 1985. Amongst other positions there, he was the head of research into vehicle dynamics, developed lectures in motorcycle technology and gained a doctorate in 1985 on the stability properties of the “rider-motorcycle-road” system. Hackenberg moved to Audi in 1985, where he took over the position of Head of Concept Development in 1989 and later led the technical project management for the entire product range. That included the Audi 80, A2, A3, A4, A6, A8 and TT models as well as numerous concept studies and show cars, the technical conception of the modular toolkit strategy and the development of a simultaneous-engineering structure. He was active in the Volkswagen Group from 1998 until 2002. There, he was head of the Body Development department and additionally responsible as of late 1998 for Concept Development. From 2002 until January 2007, Hackenberg once again worked for AUDI AG and was in charge of the Concept Development, Body Development, Electrics and Electronics departments. During that time, he developed the “modular longitudinal toolkit.” On February 1,2007, he became Member of Volkswagen’s Brand Board of Management with responsibility for the Technical Development division. He pushed forward with the further development and complete renewal of the Volkswagen product range and the development of the modular transverse toolkit. Further highlights were the XL1, the first series-produced “one‑liter car”, and the entry of the Volkswagen Brand into motorsport. As of July 1, 2013, he was the Board of Management Member for Technical Development of AUDI AG. In addition, he was responsible for coordinating the development of all the brands of the Volkswagen Group.
  16. Volkswagen's diesel emission scandal went deeper this week as the German Federal Motor Transport Authority (known as the KBA) announced on Tuesday that the software Volkswagen uses on their diesel vehicles was deemed illegal. This decision opens up the possibility of lawsuits and penalties against the company, but the extent of this is unknown at this time. As the New York Times states 'it was a turbulent day for the company.' Aside from the KBA announcing the software Volkswagen used was deemed illegal, the company announced monthly sales in the U.S. dropped 25 percent. Volkswagen also announced that 50 employees have stepped forward and provided information about the software and who knew what as part of an amnesty program that ended in November. Then came Standard & Poor's announcement that it had downgraded Volkswagen's debt from A- to a BBB+, three notches away from junk status. The rating agency said the downgrade “reflects our view that VW’s manipulation of engine emissions exposes the group to material, wide-ranging adverse credit impacts.” Source: New York Times
  17. Volkswagen is trying to save as much cash as they can to help offset the upcoming fines and penalties due to the cheating devices they fitted to a number of diesel vehicles. We have reported that Volkswagen is in the process of freezing and reevaluating a number of projects. Now it seems the German automaker is making cuts in the trims and variants it offers. Bloomberg reports that Volkswagen will be cutting back on the number of trims and variants that it offers. Bernd Osterloh, a supervisory board member at Volkswagen says the move will cut a fair amount of complexity and costs. How much are we talking about? About $1.9 billion Euros (about $2 billion). “We from the works council have long flagged the huge range of model variants and different components. That brings enormous complexity and adds to costs, for example, for logistics. We can take out costs there on a large scale and don’t have to talk about job cuts,” said Osterloh. Source: Bloomberg
  18. While much of the focus of the investigations into Volkswagen diesel emission scandal has been focused on the German automaker, attention is now turning to one of their key suppliers. Reuters has learned from sources that the U.S. Department of Justice has opened an investigation into what involvement did German auto supplier Bosch GmbH have in the scandal. Bosch built a number of key components that Volkswagen and its subsidiary brands would use on diesel engines. Now the sources are quick to point out that Bosch isn't charged with anything at the moment. A key part Bosch provided Volkswagen and a number of other German automakers is the engine control module (known as EDC17), and basic software. This module regulates how a vehicle cleans burned-up diesel fuel before it is expelled as exhaust. Each automaker has their own version of the module and software. Now Volkswagen modified the software to cheat emission tests and Bosch insisting that it had nothing to do with it or knew anything. But a source tells Car and Driver that the supplier had to know something was going on. “I’ve had many arguments with Bosch, and they certainly own the dataset software and let their customers tune the curves. Before each dataset is released it goes back to Bosch for its own validation. Bosch is involved in all the development we ever do. They insist on being present at all our physical tests and they log all their own data, so someone somewhere at Bosch will have known what was going on. All software routines have to go through the software verification of Bosch, and they have hundreds of milestones of verification, that’s the structure. The car company is never entitled by Bosch to do something on their own,” said the source. Source: Reuters, Car and Driver
  19. Audi announced this afternoon that the 3.0L TDI V6 did have a defeat device that allowed the engine to circumvent U.S. clean air laws. In a statement, the German automaker said that it failed to disclose three emission control software functions, also known as auxiliary emissions control devices (AECD) to the various agencies as required by law. One of devices, a 'temperature conditioning of the exhaust‑gas cleaning system' was deemed to be illegal by the EPA as it could detect when it was being tested for emissions and turn on the pollution-control equipment to cut emission levels down. Audi also announced the plan to fix the vehicles that will involve a software update to 85,000+ vehicles with the V6 diesel. The company will submit new U.S. government emission certification paperwork for the software. If approved by the EPA and California Air Resources Board, Audi will release software to dealers to perform the fix, Source: Automotive News (Subscription Required), Audi Press Release is on Page 2 Statement on Audi’s discussions with the US environmental authorities EPA and CARB Auxiliary emission control devices (AECD) for US version of V6 TDI 3 liter engine to be revised, documented and submitted for approval Technical solution for North America versions from 2009 model year onwards to be worked out in conjunction with the authorities Audi will revise, document in detail, and resubmit for US approval certain parameters of the engine-management software used in the V6 TDI 3 liter diesel engine. That is the result of the discussions held between a delegation from AUDI AG and the US Environmental Protection Agency (EPA) and the California Air Resources Board (CARB). The updated software will be installed as soon as it is approved by the authorities. The three brands Audi, Porsche and Volkswagen are affected. Audi estimates that the related expense will be in the mid-double-digit millions of euros. The latest discussions focused on a notice of violation of November 2, in which Audi was informed that AECDs (Auxiliary Emission Control Devices) were not sufficiently described and declared in the application for US type approval. That will now be done with the updated software and the documentation. Audi has confirmed that three AECDs were not declared in the context of the US approval documentation. One of the AECDs relates to the temperature conditioning of the exhaust‑gas cleaning system. The other two AECDs are for the avoidance of deposits on the Ad-Blue metering valve and of HC poisoning of the SCR catalyst with unburnt hydrocarbons. One of them is regarded as a defeat device according to applicable US law. Specifically, this is the software for the temperature conditioning of the exhaust-gas cleaning system. Audi has agreed with the environmental authorities on further steps of cooperation in which the concrete measures to be taken will be specified. The company has committed to continue cooperating transparently and fully. The focus will be on finding quick, uncomplicated and customer-friendly solutions. The voluntary sales stop for models with the V6 TDI diesel engine, which the three affected Group brands had provisionally decided upon, has been extended until further notice. This engine was developed by Audi and is used in the Audi US models A6, A7, A8, Q5 and Q7 from model year 2009 onwards. Volkswagen uses the engine in the Touareg and Porsche has used it in the Cayenne since model year 2013. All affected models continue to be safe and roadworthy.
  20. On Friday, Volkswagen made an announcement that many of us were expecting, cutting its massive R&D budget. The company will cut 1 billion Euros (about $1.1 billion) from R&D to prepare itself for the massive fines that will be heading its way in the near future due to the emission scandal. Along with this, Volkwagen announced that it would be capping spending on property, plant and equipment at around 12 billion euros ($12.8 billion) for next year. This is about eight percent smaller than the previous plan put forth by the company. In a statement, Volkswagen CEO Matthias Mueller said a number of projects are being delayed or put on hold, including a new design center in Germany and a paint shop in Mexico. "We are operating in uncertain and volatile times and are responding to this. We will strictly prioritize all planned investments ... anything that is not absolutely necessary will be cancelled or postponed," said Muller. Now a report from German publication WirtschaftsWoche says Volkswagen is considering closing the Dresden, Germany plant to cut more costs. This plant known as the Transparent plant is where Volkswagen currently builds the Phaeton. Currently the plant employs 500 people, but only produces eight Phaetons a week. The Phaeton has never been a big seller for Volkswagen as it only sold 4,000 models last year. If Volkswagen goes forward with closing the Dresden plant, it would move production of the Phaeton to another factory. It would also move the 500 workers to another facility. When reached for comment by Automotive News, Volkswagen neither confirmed or denied the report, only saying the factory was being considered for 'various scenarios'. Source: New York Times, WirtschaftsWoche, Automotive News (Subscription Required), Volkswagen Press Release is on Page 2 Volkswagen Group reduces level of capex CEO Matthias Müller: "We will strictly prioritize all investments and expenditures" Even greater focus on alternative drive technologies and digitalization Wolfsburg, 20 November 2015 - The Volkswagen Group is aligning investment activity in its Automotive Division with the current situation. The aim is for planned investments in property, plant and equipment, investment property and intangible assets, excluding capitalized development costs (capex), to be capped at approximately EUR 12 billion next year. The average figure for the previous planning period was about EUR 13 billion per year. "We are operating in uncertain and volatile times and are responding to this", said Matthias Müller, Chairman of the Board of Management of Volkswagen Aktiengesellschaft, in Wolfsburg on Friday, after a regular meeting of the Company's Supervisory Board. "We will strictly prioritize all planned investments and expenditures. As announced, anything that is not absolutely necessary will be cancelled or postponed." In this context, Müller announced the intention to increase expenditure on alternative drive technologies by approximately EUR 100 million next year. "We are not going to make the mistake of economizing on our future. For this reason we are planning to further increase spending on the development of e-mobility and digitalization", he said. The core focus will be on rapidly developing electric drive systems for the Volkswagen Passenger Cars, Audi and Porsche brands. Most of the capex is earmarked for new products, the continuing rollout and enhancement of the modular toolkits, and the completion of ongoing investments to expand capacity. Examples include product start-ups such as the next-generation Golf, the Audi Q5, the new Crafter plant in Poland, as well as upfront expenditures for the modular electric toolkit (MEB). Approximately 50 percent of capex will be spent on the Group's 28 locations in Germany. Müller also outlined the first projects as examples where investments are being spread out to a greater extent or cut back. For example, construction of the planned new design center in Wolfsburg is being put on hold, saving approximately EUR 100 million. In addition, the construction of a paint shop in Mexico will be reviewed. In the model range, the successor to the Phaeton – a pure-play electric model – is being delayed. "We will review and potentially cancel further expenditures or spread them out to a greater extent in the next few weeks, but without putting our future viability at risk", explained Müller. He added: "Together with the works council representatives we will make every effort to keep our core workforce on board." The joint ventures in China are not consolidated and are therefore not included in the above figures. These companies will maintain their previously announced investment levels and are planning expenditures in the amount of approximately EUR 4.4 billion in 2016. These investments will be financed from the joint ventures' own funds.
  21. We're getting to the point where it is becoming a bad idea mentioning 'could it get any worse' when talking about Volkswagen and the diesel scandal it finds itself embroiled in. Sooner or later, it will get one step worse. Case in point is Volkswagen admitting on Friday that their 3.0L TDI V6 used on a number of their vehicles does violate emission standards. Earlier in November, the EPA and California Air Resources Board (CARB) accused Volkswagen of using a defeat device in a number of vehicles with the 3.0L TDI V6. Volkswagen denied the allegations at the time. But Volkswagen and Audi told EPA and CARB officials this week that yes the 3.0L TDI V6 did violate regulations since 2009. This comes down to Volkswagen not revealing the engine had auxiliary emissions control software to the government. With this new information, the number of vehicles involved has climbed to 85,000. This has also caused the two agencies to investigate whether or not this was intentional on Volkswagen's part. Audi spokesman Brad Stertz tells Reuters that the software isn't illegal in Europe, but said the company didn't tell government regulators either. "We are willing to take another crack at reprogramming to a degree that the regulators deem acceptable," said Stertz. Source: Reuters
  22. Ahead of a November 20th deadline where Volkswagen must submit a plan to EPA about how they are planning to fix the nearly 500,000 vehicles with illegal emission software, Reuters has learned about a meeting between the EPA and officials from Volkswagen. According to sources, Volkswagen's powertrain development chief Friedrich Eichler will meet officials from the EPA and California Air Resources Board (CARB) to talk about the efforts being put forth by Volkswagen to fix the illegal vehicles. Sources go to say that officials from Audi will meet with the EPA and CARB in a separate meeting. Volkswagen and the EPA declined to comment about the meetings. Source: Reuters
  23. If there is anything the Volkswagen diesel emission scandal has shown us, it has shown the various regulations used around the world are tricky to enforce and that automakers will take advantage of loopholes. General Motors' powertrain chief wants to change that by unifying emission standards around the world. Dan Nicholson, GM's powertrain chief tells Automotive News that he plans to use his upcoming presidency of the International Federation of Automotive Engineering Societies (Fisita) to push for the unification of emission standards around the world. “We want all our engineering resources focused on improving air quality and reducing CO2. With different sets of rules, we have to put our engineering resources into nuanced regulatory differences rather than working on the root problem,” said Nicholson. Nicholson said the differences between emission standards set by the EPA and those upcoming from the European Union are small. But engineering the same vehicle to meet different standards was costing a large sum across the industry. Harmonizing the different standards will be difficult, but Nicholson says the benefits will outweigh the negatives. “There is more overlap in the areas of interest than people think,” said Nicholson. There's also another reason why Nicholson wants to take this on. China is in the process of setting up their own emission standards. “With China in discussions right now, we are at a key pivot point. I’m concerned that if we miss our opportunities now they won’t come again for a long time,” explained Nicholson. Source: Automotive News (Subscription Required)
  24. Volkswagen's emission scandal will not be an easy or quick problem to fix. Along with fixing a number of vehicles, the automaker will be facing a large amount of fines from various governments and possibly payouts from lawsuits. To make sure they have enough money to cover all of this, Volkswagen is reportedly is taking out some short-term loans. Bloomberg has learned from two sources that the German automaker will meet with a number of banks tomorrow to apply for 20 billion euros (about $21.5 billion) in short-term loans to act as a buffer for upcoming fines. The hope is to have the loans by the end of this year. “It makes perfect sense” to shore up financing, said Sascha Gommel, analyst for Commerzbank AG. “In order to protect their rating, they need to show that liquidity will never become an issue for them, because then you have a vicious circle. If the ratings agencies think you won’t have cash and they downgrade you, then your funding gets more expensive.” Source: Bloomberg
  25. After Volkswagen admitted that it used software to vary the amount of emissions being produced in their diesel vehicles, Volkswagen is using a legal loophole to provide a defense in Europe. In a letter sent last week to European regulators, Volkswagen Group Managing Director Paul Willis said that the company's cheat software might not be illegal under current European Union regulations. Crazy as might sound, there is a loophole that allows this. The New York Times reports that the European regulations have a massive loophole that could put Volkswagen in the clear. In fact, regulators knew about this loophole back in 2011. We'll let the New York Times explain the loophole. "The loophole lets carmakers change the performance settings of their engines before a pollution test. “A manufacturer could specify a special setting that is not normally used for everyday driving,” British regulators warned, according to minutes of a 2011 meeting in Geneva of officials across the region." Willis points this out in his letter, stating the automaker is considering "whether the software in question officially constituted a defeat device." Now this is only a small part of a number of problems with how Europe regulates how vehicles. Automakers can submit to testing in any of the 28 member states of EU and have those results recognized across the EU. Also, automakers can submit pre-production models and do various tweaks such as removing seats and taping up gaps for emission tests. "What we have developed is a phony system of testing where the member states [of the European Union] are in competition with each other for who can make it the most easy for the car manufacturers to pass the test," said Gerben-Jan Gerbrandy, a Dutch member of the European Parliament. Now the EU has the final say as to whether or not Volkswagen's cheating software is actually illegal or not. Lucia Caudet, a spokeswoman for the European Commission tells the Times that the governing body has "no formal view on whether” the software in question counts as "a 'defeat device' in the EU legal sense or not." We'll keep you updated on this. Source: New York Times Wills' letter is below.

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