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  1. The diesel emission scandal has caused Audi to change up their development cycle. A source tells Car and Driver that Audi has sped up the development cycle for e-tron quattro and h-tron quattro models. The board has allegedly diverted engineering and financial resources toward these models and put all non-essential projects on the back burner. “Everybody is of course concerned about the aftereffects of the diesel crisis, and the thinking is that Audi has to show people we are serious about these kinds of cars,” said the source. “Every kind of thinking has changed since the diesel problems. We are pushing to bring zero-emission cars to market as fast as we can now—and pushing to do them right.” Here is what we know about the two models. The e-tron quattro will be arriving in 2018 and sit in between the Q5 and Q7 (this is the supposed Q6 model). Much like the e-tron quattro concept shown at last year's Frankfurt Motor Show, the production model will boast three electric motors - one on the front axle and two on the rear axle. Range is expected to be around 370 miles. A year later, the production version of the h-tron quattro will appear. It will supposedly have a range of 370 miles and can be re-filled with hydrogen in four minutes. But what about the non-essential projects? This is where it gets interesting. Car and Driver says there are three projects on hold - the Q4, TT Offroad, and TT Sportback. The Q4 as we reported earlier this week is a coupe-like crossover based on the Q3. The two TT models were the dream of former Audi development chief Ulrich Hackenberg of creating a TT family. Source: Car and Driver
  2. 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
  3. 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)
  4. 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
  5. 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
  6. 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.”
  7. 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
  8. More bad news for Volkswagen this week. Speaking with German publication Wirtschaftswoche, California Air Resources Board's (CARB) chair Mary Nichols said in their testing, only Volkswagen TDI models were found to have cheating devices. "So far we have found in vehicles of other brands no fraudulent shutdown. This does not mean that all emissions are as we would wish. But there is nothing that comes close to the magnitude of the excess in VW vehicles," Nichols said CARB will continue testing diesel vehicles. Meanwhile, Automotive News reports that Volkswagen has halted production of 2016 Passat TDI models at its Chattanooga, TN plant. No word on production was ended as a spokesman tells AN that he only learned about it today, but it's safe to assume it had to be some after the company withdrew its application for EPA certification on 2016 models equipped with the 2.0 TDI. Automotive News says Volkswagen continued production of the Passat TDI even after the EPA announcement that the 2.0 TDI was found to cheat back in September. Source: Automotive News (Subscription Required), Wirtschaftswoche, Reuters
  9. A number of Volkswagen engineers have admitted that they manipulated CO2 emission data to meet ambitious goals to meet goals set by former Chief Executive Martin Winterkorn. German newspaper Bild am Sonntag (via Reuters) reports that engineers filled tires with more air and mixed diesel with their motor oil to make them use less fuel. This reportedly began after then-CEO Martin Winterkorn's announcement at the 2012 Geneva Motor Show that by 2015, the company would cut CO2 emission levels by 30 percent. Engineers at the time were afraid to tell the CEO that this goal was impossible and decided to cheat. "Employees have indicated in an internal investigation that there were irregularities in ascertaining fuel consumption data. How this happened is subject to ongoing proceedings," a Volkswagen spokesman told Reuters. This report comes to light as Volkswagen announced last week that 800,000 vehicles in Europe - mostly diesel - were underreported for fuel consumption and carbon dioxide emissions. Source: Bild am Sonntag via Reuters, New York Times
  10. The Volkswagen diesel scandal has prompted the German transport minister to meet with the counterpart in the U.S. According to Reuters, Alexander Dobrindt will be holding talks today with Anthony Foxx, the U.S. Secretary of Transportation about the scandal. The report goes on to say that Dobrindt hopes to meet with officials from the EPA. That's not all that is taking place in the U.S. for Volkswagen. Another report from Reuters says the company has put plans of overhauling the management and overall strategy for the U.S. on hold till they deal with the litany of lawsuits and penalties. "What matters more than anything else right now is to sort out this disaster," a source said. "If we fail to do that, then questions that are completely different (than the future U.S. leadership) will come up," Now one of items that this decision affects is finding someone to take the place of North American head Winfried Vahland, who stepped down a few weeks after being announced to the position. Source: Reuters, 2
  11. Another week has passed and some new information has come to light in the Volkswagen diesel scandal. First off, Volkswagen has confirmed one of their diesel engines doesn't have the cheat. The EA 288 TDI engine used in vehicles for the European-market has been checked out to see if it had the illegal software. In a statement issued by Volkswagen, the engine did not have “software constituting an improper defeat device as defined in laws is installed in vehicles with EA288 EU5 as well as EU6 engines in the European Union with those engines comply with legal requirements and environmental standards." Also, one of the questions that have been up in the air is how would the scandal affect the prices of used Volkswagen TDI models. Kelly Blue Book looked at data from auto auctions before and after the scandal broke. According to their research, the average price of diesel models dropped 16 percent. Average prices of gas models dropped 2.9 percent in the same time. "According to Kelley Blue Book Field Analysts, some auctions are still holding off on selling the affected Volkswagen inventory. While Volkswagen diesel auction prices are in decline, we could see larger fluctuations depending on how this inventory is handled," said Tim Fleming, analyst for Kelley Blue Book. Source: Volkswagen, Kelly Blue Book Press Releases are on Page 2 Volkswagen confirms: EA288 engines designed for EU5 and EU6 are not affected Thorough appraisal of the Diesel emissions issue Volkswagen confirms today that no software constituting an improper defeat device as defined in law is installed in vehicles with EA 288 EU5 as well as EU6-engines in the European Union. Consequently, new vehicles of the Volkswagen Group offered within the European Union with those engines comply with legal requirements and environmental standards. Volkswagen AG is systematically reviewing this issue worldwide. The group strives for a holistic solution for complying with the respective valid standards. After thorough examination it is now confirmed that no software constituting an improper defeat device as defined in law is installed in vehicles with EA 288 EU5-engines. Before, Volkswagen Group has confirmed that new EU6-compliant vehicles offered within the European Union fulfil all legal requirements and environmental standards. Volkswagen customers can visit the corporate websites such as www.volkswagen.de/info, which was set up on October 2, 2015 and enter the chassis number of their vehicle to find out straight away whether their vehicles are affected. Similar customer websites are active in the other EU countries and for the Audi, SEAT and Škoda brands. Work on the technical solutions detailed in the plan of measures is currently proceeding at full speed. Remedial action on the vehicles will begin in January 2016 – at no cost to customers. The measures are currently being developed for each affected series and each affected model year and will first be presented to the responsible authorities. Volkswagen will subsequently inform the owners of these vehicles over the next weeks and months. VOLKSWAGEN DIESEL VEHICLE PRICES DECLINE NEARLY 16 PERCENT, ACCORDING TO KELLEY BLUE BOOK DATA New-Car Shopping Activity Also Impacted by Recent Emissions Issue IRVINE, Calif., October 21, 2015 – Kelley Blue Book www.kbb.com, the only vehicle valuation and information source trusted and relied upon by both consumers and the automotive industry, today reports that average auction prices, along with new-car shopping activity on KBB.com, for Volkswagen diesel vehicles have declined four weeks after the diesel emissions issue was announced. The average auction price for Volkswagen diesel models dropped by nearly 16 percent since the news broke of the emissions crisis.[1] The average auction price for the brand's gasoline-powered vehicles declined by 2.9 percent.1 On KBB.com, Volkswagen new-car shopping activity for affected TDI models has decreased on average by 2.4 percent. "According to Kelley Blue Book Field Analysts, some auctions are still holding off on selling the affected Volkswagen inventory," said Tim Fleming, analyst for Kelley Blue Book. "While Volkswagen diesel auction prices are in decline, we could see larger fluctuations depending on how this inventory is handled." Volkswagen Site Metrics from Kelley Blue Book's KBB.com* The Volkswagen Golf SportWagen and Golf have seen the most significant declines in shopping activity, with decreases of 6.2 percent and 3.7 percent respectively. The Audi A3 and Volkswagen Jetta SportWagen are the only TDI models seeing increases in activity, at 1.6 and 3 percent respectively, which is consistent with segment-level traffic on KBB.com. Audi A3 shoppers are increasingly cross-shopping competing luxury models following the announcement. The most highly cross-shopped vehicles are the Lexus NX, BMW 2-Series and Mercedes-Benz CLA. ** * Kelley Blue Book's KBB.com Site Traffic, Comparing September Pre- (Weeks of August 31-September 13) and Post- (Weeks of September 14-October 18) Announcement Data. Please note: Data is compiled weekly (Monday-Sunday). ** Kelley Blue Book's KBB.com Cross-Shopping Data for Week of October 12-18, 2015 "During the past four weeks following the emissions announcement, traffic to KBB.com has generally decreased after an initial surge in interest for Volkswagen diesel models, likely because of the stop-sell and negative press," said Arthur Henry, senior manager of Strategic Insights for Kelley Blue Book. "Interestingly, with regard to cross-shopping data, consumers are not looking at fuel-efficient or hybrid vehicles. For example, shoppers interested in the Jetta TDI are looking to the Honda Civic, Mazda3 and Ford Fusion as alternatives, according to cross-shopping data from KBB.com."
  12. Reuters is reporting that Volkswagen developed several versions of its "defeat device" software for their diesel models. Three sources tell the news service the company used the different versions of the software on four diesel engine types. If this proves to be true, this could indicate a widespread cheating program at the company, not the rogue engineer claim that executives have been using as a defense. This also puts Volkswagen in a difficult position when it comes to potential fines. If executives are found to play a role in the plot to cheat emissions tests, fines could increase by a fair amount. "The more higher-ups that are involved, the more the company is considered blameworthy and deserving of more serious punishment," said Brandon Garrett, a corporate crime expert at the University of Virginia. Spokespeople for Volkswagen and Volkswagen of America declined to comment, citing the ongoing investigations by itself and outside parties. Source: Reuters
  13. In light of a scandal, the one item a company needs is stability. Unfortunately for Volkswagen, the diesel emission scandal has seemed to bring growing levels of instability. Case in point is the announcement of Dr. Winfried Vahland stepping down. Vahland was picked to become the head of Volkswagen's North American unit only a few weeks back. In a statement released by the automaker, the two had "differing views" on the company's new structure and his departure is "expressly not related" to the emissions scandal. Meanwhile, a report from German publication Spiegel says that at least 30 managers at Volkswagen were involved in cheating emission tests citing information from investigations done by Volkswagen and the law firm Jones Day. The report goes on to say that the number of people who knew about the cheating could expand as the investigations go on. A Volkswagen spokesman told Reuters that the number in Spiegel's report "is completely unfounded." Later this week, Volkswagen CEO Matthias Müller will meet with senior management and update them on the investigation and plan the next move. Source: Skoda, USA Today, Spiegel.de, Automotive News (Subscription Required) Press Release is on Page 2 Prof. Dr. Winfried Vahland leaves Volkswagen Group Mladá Boleslav, 14 October 2015 – After 25 years of successful work in Volkswagen Group, most recently as Chairman of ŠKODA, Prof. Dr. Winfried Vahland is leaving the company at his own request. Prof. Vahland will therefore not be taking up the position of overall responsibility for the North American Region (NAR). Differing views on the organisation of the new Group region have led to this decision; this decision is expressly not related to current events on the issue of diesel engines. Prof. Vahland began his work in Volkswagen Group in 1990. After holding several key positions at home and abroad, he took over Group responsibility as President and CEO of Volkswagen in China in 2005 and contributed significantly to the successful new direction of Volkswagen in China. He was appointed Chairman of the Board of Management of ŠKODA in 2010. Under his leadership, ŠKODA implemented the largest growth and model campaign in the brand’s history and positioned ŠKODA sustainably as a successful international high-volume brand. The CEO of Volkswagen Group, Matthias Müller emphasised: “In the last 25 years, Prof. Vahland made a great contribution to the company. We respect his decision and thank him for his exceptional performance.”
  14. Volkswagen CEO Matthias Mueller told a German publication that it would launch a recall for diesel vehicles that have emission-cheating software starting in January and hopefully finish up fixing all of the vehicles by the end of the year. "If all goes according to plan, we can start the recall in January. All the cars should be fixed by the end of 2016," Mueller told the Frankfurter Allgemeine Zeitung. Now it should be noted this is only for vehicles in Europe. A Volkswagen of America spokeswoman says the EPA has to agree to the fix that Volkswagen would present. No timetable was given as to when a fix would be announced. Muller said a number of vehicles could be fixed by a software update, while others will need new injectors or larger catalytic converters. Source: Frankfurter Allgemeine Zeitung via Reuters, CNN Money
  15. Volkswagen CEO Matthias Mueller told a group of 20,000 employees today in Germany that the company will be cancelling and delaying a number of projects in light of the diesel emission scandal. "Therefore we are putting all planned investments under review. What is not urgently needed will be scrapped or delayed. And therefore we will adjust our efficiency program. I will be very open: this won't be painless," said Muller. Fixing around 11 million vehicles around the world that are affected by the rigged software is a costly prospect for Volkswagen. Muller says the $7.29 billion set aside for repairs will not be enough to pay for fines and lawsuits. Volkswagen has been criticized for being an “incredibly inefficient” company. Last year, the automaker had set aside $17.4 billion research and development. That is higher than what Ford and General Motors spent on r&d combined last year. “Where’s the innovation? Obviously not in diesel engines. There’s a culture of spending and a lack of focus on efficiency in favor of striving to be bigger,” said Arndt Ellinghorst, an analyst with Evercore ISI. Source: Bloomberg
  16. Mazda's Skyactiv diesel engine has been rocky since it was first announced back in 2011. The automaker was planning on having it available on one of their vehicles starting in 2013. But since then, Mazda has pushed back the launch again and again, citing the reason of delivering "the right balance between fuel economy and Mazda-appropriate driving performance." But in light of the Volkswagen cheating emissions on their diesel vehicles, a few people are questioning whether or not Mazda will go forward with their diesel plans. “It’s been delayed and delayed, and Mazda keeps saying it’s coming. At this point, I don’t understand why they would need a diesel for this market. I don’t see it happening,” said Dave Sullivan, an analyst for AutoPacific to Bloomberg. Sullivan points out that in light of the Volkswagen scandal, the U.S. Government is going to make it even tougher for diesel vehicles to be sold. “The government is not making it easy, and if anything it’s just going to get worse. The oversight that’s coming is about to make it even more difficult,” said Sullivan. Bloomberg reached out to Mazda who said engineers in the U.S. are still hard at work on the engine. Mazda says they don't a have a timetable as to when the engine will be introduced, nor will they be changing their plans in light of the Volkswagen mess. Source: Bloomberg
  17. With the ongoing mess that is the Volkswagen Diesel scandal, Jaguar Land Rover isn't changing their strategy of selling diesel vehicles for the U.S. marketplace. “We are convinced of the benefits of diesels from a fuel economy and from an all-wheel drivability perspective, and that hasn’t changed,” said Joe Eberhardt, Jaguar Land Rover U.S. CEO. Eberhardt says it's "too soon to tell" if the diesel market will be weighed down by the mess caused by Volkswagen, but is confident in their diesel engines in meeting EPA requirements. The company is planning on introducing diesel engines to the majority of their lineup by the end of 2017. Land Rover has begun selling the Range Rover and Range Rover Sport with a turbocharged 3.0L diesel V6 in September. Eberhardt said that roughly 16 percent of the total sales of the Range Rover and Sport models in September were equipped with the diesel engine (about 332 models). JLR Spokesman Stuart Schorr tells Automotive News that the diesel V6 has been certified by the EPA, but admits that it is unclear if the EPA will need to recertify the engine. Source: Automotive News (Subscription Required), Autoblog
  18. Yesterday, Volkswagen CEO Matthias Mueller said that owners of affected diesel vehicles will need to have them 'refitted'. Muller didn't go into detail about what he meant, but Reuters has some possible ideas. Speaking with experts, Reuters says Volkswagen might have to develop different solutions for the 482,000 vehicles affected in the U.S. This comes down to Volkswagen using two different systems for controlling emissions; lean NOx traps (most Volkswagen diesel vehicles involved in the scandal) and a urea injection system (Volkswagen Passat TDI). For vehicles equipped with the lean NOx traps, Volkswagen could get away with using a software update says Marc Trahan, former executive vice president of group quality for Volkswagen. Trahan says the older engines shouldn't need to have newer hardware installed as it would require extensive "re-engineering" and cost a large amount of money. Others argue that a hardware solution may be the only way these vehicles meet EPA standards. For the Passat TDI, that might only need a software update. But it might bring up another problem; more fill-ups for the urea injection system. Most experts do agree these updates will cause the loss of performance and fuel economy. Source: Reuters
  19. If you didn't think the diesel scandal at Volkswagen could get any worse, think again. Let's begin with the former CEO at Volkswagen, Martin Winterkorn. Reuters is reporting that German prosecutors have opened an investigation into Winterkorn into "allegations of fraud in the sale of cars with manipulated emissions data" based on ten unidentified individuals filing charges. Now Winterkorn has said that he wasn't aware of any wrongdoing on his part in light of this scandal. There is a report from Automotive News Europe that says three r&d heads at Volkswagen have been suspended. The three are, Audi development chief Ulrich Hackenberg Porsche development head Wolfgang Hatz VW brand r&d boss Heinz-Jakob Neusser Those with keen eyes will notice two of these folks, Hackenberg and Hatz were rumored to be shown the door last week. Now Hackenberg and Hatz previously ran units at the heart of the Volkswagen diesel scandal. Hackenberg was responsible for Volkswagen development from 2007 to 2013, while Hatz oversaw Volkswagen group's engine development from 2007 to 2011. Audi and Volkswagen declined to comment. Source: Automotive News Europe (Subscription Required), Reuters
  20. As we reported yesterday, Volkswagen has decided against revealing the preliminary results of their internal investigation as it would bring “unacceptable risks” to the company. It might have been a good idea as a new wrinkle has appeared in the diesel emission scandal. The New York Times has learned from two sources that a top technology executive prepared a PowerPoint presentation showing the automaker could fool the EPA's emission testing. The presentation was only a few pages long and explained the process of how the EPA did it. The presentation also talked about how the test could be fooled by a piece of code in the engine management software, turning on equipment that would reduce the amount of emissions produced. The obvious question is why? Back in 2006, engineers at Volkswagen's r&d complex realized that the emission equipment in their new diesel engine would wear out faster if it was set up for the U.S. emission standards. This presentation provided a possible solution. It is unknown who and how many people saw this presentation. But it brings doubt into Volkswagen's claim that a small group of employees knew about the cheat. The Times also reports that Martin Winterkorn - the former chief executive for Volkswagen - rejected proposals from low-ranking employees. According to sources who attended meetings with the management board, the proposals were tossed out as it would increase the price of Volkswagen vehicles. Unsurprisingly, Volkswagen declined to comment. Source: The New York Times
  21. Volkswagen was planning to release the preliminary findings of its internal investigation into the diesel emission scandal this month. But now, the company has scrapped those plans. In a statement, the German automaker cites strong objections from their lawyers and “unacceptable risks” to the company. But there might be more this than what Volkswagen is saying. Last week, Volkswagen finally reached a deal with the U.S. Government over the emission mess. By releasing the results, it might put Volkswagen in a difficult sport. “Publishing such a preliminary report would not only endanger the complex and confidential settlement talks [with authorities and plaintiffs], it would also have a negative effect on ongoing investigations as individuals who have yet to be questioned could align their statements with the contents of the report. We must avoid this,” said Volkswagen board director Wolfgang Porsche to reporters in Wolfsburg. It isn't being helped that the investigation has hit a few bumps in the road. According to Automotive News, the Jones Day law firm - hired by Volkswagen to do the investigation - have so far failed define key points of the scandal. Bloomberg goes on to say that the firm has been confounded by engineers using code words to describe the illegal software and outdated computer systems. The final investigation report is not expected until the fourth quarter of the fourth year. Source: Automotive News (Subscription Required), Bloomberg, Volkswagen Press Release is on Page 2 Statement by Volkswagen AG regarding the status of the comprehensive investigation in connection with the diesel matter At the end of September 2015, the Supervisory Board of Volkswagen Aktiengesellschaft assigned law firm Jones Day with a comprehensive investigation in connection with the diesel matter. This investigation is already far advanced and is being pursued intensely. For this purpose, approximately 65 million documents were submitted for electronic review, of which more than 10 million were forwarded for review by Volkswagen's lawyers. Around 450 interviews have also been conducted about the diesel matter; dozens of additional interviews are planned. Based on the current assessment, Jones Day expects the investigation to conclude in the fourth quarter of 2016. After a thorough examination of the legal situation, the Supervisory Board and the Management Board of Volkswagen have nevertheless had to recognize that a disclosure of interim results of the investigation at this point in time would present unacceptable risks for Volkswagen and, therefore, cannot take place now. This decision is based on the assessment of the U.S. law firms retained by Volkswagen (Sullivan & Cromwell and Jones Day), which have both strongly advised against such a disclosure independently of each other. Volkswagen regrets that it has had to move away from the original plan to disclose interim results of the investigation by the end of April. The reasons lie in the following developments in proceedings involving Volkswagen in connection with the diesel matter in the United States: Volkswagen's complex negotiations with a large number of parties in the United States (including private plaintiffs and multiple U.S. regulators, including the Environmental Protection Agency (EPA), the California Air Resources Board (CARB), the Federal Trade Commission, the Attorneys General of each of the 50 states, and, in particular, the U.S. Department of Justice) have entered a decisive phase sooner than anticipated and require Volkswagen to maintain the highest degree of confidentiality. The extensive and confidential nature of these negotiations and Volkswagen's cooperation with the Department of Justice restrict Volkswagen´s ability to comment further on necessarily tentative results of the continuing investigation. The further disclosure or characterization of interim results, which are currently available, would likely prejudice the rest of the investigation at this time, in particular because individuals who have yet to be questioned could align their statements with the contents of the interim report. In counsel's view, a disclosure would also significantly impair Volkswagen's cooperation with the Department of Justice and weaken Volkswagen's position in any remaining proceedings. In counsel's view, such disclosure could also jeopardize the credit that Volkswagen may expect to receive in the event of its full cooperation with the Department of Justice. According to Volkswagen's legal advisers, this could have very substantial negative financial consequences. lf a full settlement can be achieved with the Department of Justice, the Supervisory Board and the Management Board currently expect that a detailed statement of the facts of this matter will be made public in the U.S. at that time. This is because the settlement of a criminal investigation with the Department of Justice is customarily accompanied by a detailed statement of facts, agreed to by the parties. Volkswagen explicitly regrets that it is not able to publish interim results by the end of April as initially planned. However, due to the reasons outlined above, the Management Board and the Supervisory Board see themselves forced to refrain from a disclosure in the interest of the company.
  22. Towards the end of February, U.S. District Judge Charles Breyer gave Volkswagen a deadline. On March 24th, the German automaker would have to give a definitive answer on the status of a fix for nearly 600,000 diesel vehicles. At a hearing this week, Breyer has moved the deadline to April 21st. According to Reuters, both the EPA and Volkswagen said at the hearing they are making progress on a reaching an agreement. But there are still a number of issues to work out. A possible issue is whether the EPA would accept a partial fix on some Volkswagen diesel vehicles. Earlier this month, an official from CARB said it might not be possible for Volkswagen to fully fix some of the diesel models involved in the scandal. But Judge Breyer told Volkswagen this was their only extension. If they don't reach a deal with the EPA by April 21st, Breyer would bring this issue to a trial. Source: Reuters
  23. Over the past six months and numerous articles with the ‘As the Diesel Emits’ in the title, we are no closer to have a fix for the around 600,000 Volkswagen diesel vehicles with illegal emission software. Instead, we have been treated a first-rate performance of ‘How not to handle a crisis’. From Volkswagen’s delay of admitting the illegal software to CEO Matthias Muller seeming very oblivious to what happening in an interview. It seems the German automaker is getting one black eye after another. The past month or so has seen the crisis cranked up to eleven. New documents revealed that senior managers, including former CEO Martin Winterkorn, were alerted about the U.S. probing some of their TDI models back in 2014 This was followed up by a letter from last year alerting Winterkorn that the Volkswagen did use a defeat device in their diesel models - two weeks before the official EPA announcement. A U.S. Federal Judge has given Volkswagen until March 24th to give an answer on where they stand on a possible fix. Volkswagen of America CEO and President Michael Horn suddenly stepped down from his position. With Horn’s departure, dealers want answers as to what happens next or a mutiny could happen. Ever since this scandal came to light, there has been a question that has been floating around in my head: Does Volkswagen know how much trouble it is in? On the surface, it seems they do and are trying their best to rectify this issue. But dig a little bit further and there are very troubling signs. For example, the Associate Press last week learned from a couple people that Volkswagen’s management in Germany resisted the plan set by Horn to offer $1,000 in gift cards to owners as a gesture of goodwill. Thankfully management relented and the program was instituted. Then there was Volkswagen’s first proposal to fix the affected vehicles in the U.S. which got rejected by the California Air Resources Board as it was “incomplete, substantially deficient and fall far short of meeting the legal requirements to return these vehicles” to compliance. Since then, Volkswagen has been working on a new solution to present to CARB and the EPA, though we haven’t heard anything about it. These concerns bring up another question about Volkswagen: Do they know what their place in America is? Last September, Automobile Magazine ran an excellent editorial titled Volkswagen Has Never Understood its Place in the U.S. In the piece, the author argues that Volkswagen is seen by many Americans as something out of the mainstream - original Beetle, Microbus, Golf GTI, and their diesel lineup. Because of this, Volkswagen has a small, but loyal fanbase, But Volkswagen sees themselves as something different; a mass-market brand capable of selling many vehicles around. Except in the U.S. A few years ago, Volkswagen set an ambitious goal of selling 800,000 vehicles in the U.S. by 2018. To achieve this goal, the automaker decided to build vehicles tailored to the marketplace. What we ended up with was a Passat and Jetta that were appealing as stale bread because that is what the company thought would sell. At first, the strategy worked as sales of Volkswagen vehicles increased. But in the past couple of years, sales have dropped precipitously. The company has been scratching their heads as to why this is happening. It goes back to Volkswagen not understanding their place in the U.S. That last sentence can be extended further into the diesel emission crisis. The way Volkswagen has handled this crisis is nothing short of disastrous. If you are a company dealing with a massive crisis, the key thing you should be doing is keeping everyone somewhat abreast of what is happening. Volkswagen has barely done this and has given the impression that they are really not doing anything, despite all of the reports saying Volkswagen is conducting an internal investigation and working on a fix. This one quote from the Automobile Magazine editorial partly sums the predicament Volkswagen finds itself in. “That left the small clique of devoted enthusiasts, folks who bought Volkswagens because they were Volkswagens, and often because they were Volkswagen “clean” diesels. These are precisely the people Volkswagen just kicked in the teeth.” They’re not the only group that Volkswagen has caused pain. Dealers who bought into Volkswagen’s vision of being a mass-market brand and spent close to a billion dollars, only to see sales fall apart are not very happy. There also seems to be a disconnect between dealers and Volkswagen as this quote from Bloomberg illustrates, “The suggestion was startling: Maybe VW should give up on selling cars to America’s masses. It was late January, at the Detroit auto show, and Herbert Diess, the global chief of Volkswagen AG’s namesake brand, was sounding out U.S. dealers as the company grappled with the biggest crisis in its modern history. Perhaps, Diess wondered aloud, VW should stop trying to compete with the likes of Toyota Motor Corp. in America and go back to focusing on higher-end models. “It was near crickets in the room,” said Alan Brown, chairman of VW’s U.S. dealer council.” Volkswagen is now at a crossroads with seemingly everyone angry with them in one form or another. There are so many things the company could have done to be in a better place than they are currently. But the Volkswagen’s mindset and not fully understanding the U.S. put them in a the place where they are now. Whether or not they learn from this experience and make the necessary changes to survive remains to be seen. The one thing we are sure about is that Volkswagen lost a lot of trust from various groups because of this scandal. As anyone will tell you, regaining trust is a seemingly impossible task.
  24. A new wrinkle has appeared in the Volkswagen diesel scandal. Last week, Daniel Donovan filed suit against Volkswagen of America for wrongful termination and breaking the Michigan Whistleblowers' Protection Act after reporting that the company continuing deleting data after the EPA said to stop. On September 18, the EPA filed a violation notice against Volkswagen's diesel vehicles. Part of that notice required Volkswagen to not delete any more data. Donovan alleges in the suit that workers at Volkswagen Group of America's data processing center in Auburn Hills, MI did not stop till September 21st. Donovan told his supervisor about this and tried to stop the deletions. A couple of months later, Donovan was fired. Donovan claims his firing was due to concerns Volkswagen of him reporting this to authorities. "The circumstances of Mr. Donovan's departure were unrelated to the diesel emissions issue. We believe his claim of wrongful termination is without merit," said Volkswagen in a statement to Autoblog. Unfortunately, we don't know what kind of data was deleted. But if these allegations are proven to be true, it doesn't matter what kind of data it was: Volkswagen violated the order and could be facing punishment for it. Source: Courthouse News Service, Sueddeutsche Zeitung, Reuters, Autoblog
  25. We're getting close to entering the seventh month of not having a fix for Volkswagen's cheating TDI engines in the U.S. A couple weeks back, a Federal judge in California gave Volkswagen a deadline of March 24th to provide a definitive status of a fix. But Volkswagen might not have the answer the judge or affected owners want. In an interview with German newspaper Wolfsburger Allgemeine Zeitung, Volkswagen brand boss Herbert Deiss said it could take months before Volkswagen and U.S. authorities come to an agreement. "I think that we have a good chance to reach an agreement with the authorities in the US in the coming months," said Deiss. There are a couple possible reasons for Deiss' response. First is that Volkswagen still doesn't have another solution ready. As we reported back in January, Volkswagen's first proposal was rejected by CARB due to it being "incomplete, substantially deficient and fall far short of meeting the legal requirements to return these vehicles” to compliance. Volkswagen has been hard at work on a new proposal since then. There has been talk this new proposal will include a buyback program. The second reason comes down to money. Volkswagen knows that it will be facing large fines from various regulators, along with the massive costs in terms of fixing vehicles and dealing with lawsuits. Source: Wolfsburger Allgemeine Zeitung, Reuters

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