VW Making Progress On Diesel Fix, Employee Probe

Volkswagen has developed a remedy that will bring its cars into compliance with European emissions standards by combining revised engine software with hardware that looks a bit like a small camera with a very long telephoto lens.

This combination will meet only the standards of the European Union and will not suffice in the United States, which has stricter emissions regulations. VW acknowledges that its engineers programmed 11 million vehicles to deceive emissions tests. Of them, the company says, about 8.5 million will require retooling, including about a half-million in the United States.

VW said Wednesday that the only question still unanswered regarding the fix for Europe is whether the change will limit the vehicles’ fuel economy or performance. Still, just by the numbers, the fix in Europe appears to be a major step in resolving the crisis that has beset Europe’s largest automaker for the past two months.

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And the remedy just may be a money-saver. VW has earmarked more than $7 billion to cover such repairs, while the recall and repair of its European vehicles should cost no more than about $532 million, according to Ferdinand Dudenhoeffer, a professor at the University of Duisburg-Essen who co-founded the school’s Center for Automotive Research (CAR).

“Volkswagen is finding its financial footing more quickly than expected,” Dudenhöffer wrote in an email to The New York Times. But he stressed that its costs still could rise steeply, especially with stiff fines likely to be imposed by the U.S. Environmental Protection Agency, as well as from lawsuits expected to come from company shareholders and customers.

Meanwhile, Audi CEO Rupert Stadler says the VW subsidiary has suspended two engineers because its larger diesel engines in cars sold in the United States were found to have been fitted with software that deceives emissions testing, known as a “defeat device.”

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This brings to eight the number of employees of VW and its subsidiaries who have been furloughed as a result of the 2-month-old scandal that already has cost the automaker about $21 billion in market value. Of the eight suspended employees, at least six are senior employees.

VW and Audi informed officials in the United States a week ago that the programs had been installed in about 85,000 of their vehicles powered by 3.0-liter V-6 diesel engines. In an interview with the German newspaper Donaukurier, published Thursday, Stadler said Audi is investigating whether workers deliberately installed what they knew to be defeat devices. He didn’t elaborate.

On Monday, Audi said the engine in question was designed and built by Audi and is routinely used from 2009 through 2016 in premium cars bearing the brands of VW, Audi and Porsche, another subsidiary of Volkswagen.

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At the same time, authorities in Germany and in California have mounted new investigations into the scandal. Prosecutors in Ingolstadt have begun a criminal probe into whether Audi employees deliberately installed deceptive software into that company’s vehicles. This is one of several investigations in Germany targeting VW and its subsidiaries. So far, no individuals have been charged.

And the California Air Resources Board (CARB) has opened its own investigation of Volkswagen and its subsidiaries’ vehicles using the 3-liter diesel engine from 2009 through 2016. It gave the companies 45 days to come up with a detailed recall program for fixing the vehicles.

Asked about the CARB probe, an Audi spokesman in the United States told The Wall Street Journal in an email, “We fully intend to work on solutions to present to regulators within this window of time. We take this very seriously and treat responses to the agencies as a solemn responsibility.”

By Andy Tully of Oilprice.com

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