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VW scandal: Could the same happen in Europe?
Washington (AFP) Sept 21, 2015

US accuses Volkswagen of 'cheating' on pollution controls
New York (AFP) Sept 18, 2015 - US regulators charged Volkswagen on Friday with manufacturing vehicles designed to evade government pollution controls and said the German auto giant should urgently fix nearly 500,000 cars.

Volkswagen could face an $18 billion penalty over the software made to meet clean-air standards during official emissions testing but which would intentionally turn off during normal operations, US and California regulators said.

As a result, the diesel cars emit greater-than-allowed quantities of pollution linked to smog and various health ills.

"Using a defeat device in cars to evade clean-air standards is illegal and a threat to public health," said Cynthia Giles, assistant administrator for the US Environmental Protection Agency.

Both the EPA and the California Air Resources Board have launched investigations into the matter. The EPA also referred the case to the US Department of Justice.

Potential civil penalties under the Clean Air Act could be as much as $37,500 per car, or more than $18 billion.

The origin of the case was a report last year by the International Council for Clean Transportation and West Virginia University that documented elevated emissions from some Volkswagen cars.

The cars in question could emit as much as 40 times the legal standard of nitrogen oxide, the EPA said.

- 'Defeat device' -

When regulators initially raised the issue with Volkswagen, the automaker blamed the elevated pollution on "various technical issues and unexpected in-use conditions," EPA said in the violation order.

Volkswagen in December last year initiated a voluntary recall of about 500,000 cars. Regulators broadened their probe when the cars continued to pump out excess emissions after the recall, despite showing some improvement, the California board said.

At that point, regulators told Volkswagen that they would not approve the automaker's 2016 models "until VW could adequately explain the anomalous emissions and ensure the agencies that the 2016 model year vehicles would not have similar issues," the EPA said.

"Only then did VW admit it had designed and installed a defeat device in these vehicles in the form of a sophisticated software algorithm that detected when a vehicle was undergoing emissions testing," the EPA said.

California regulators said they would continue to probe the matter.

"Our goal now is to ensure that the affected cars are brought into compliance, to dig more deeply into the extent and implications of Volkswagen's efforts to cheat on clean air rules, and to take appropriate further action," said Richard Corey, executive officer at the California Air Resources Board.

A Department of Justice spokesman declined comment.

Volkswagen said it had received notice of an investigation "related to certain emissions compliance matters" from the EPA, the California board and the Justice Department.

"VW is cooperating with the investigation; we are unable to comment further at this time," it added.

The allegations cover 482,000 diesel models of Volkswagen Jetta, Beetle and Golf for 2009-2015 and the Audi A3 for the same years.

The action also affects the Volkswagen Passat for 2014-2015.

The EPA said it is "incumbent on Volkswagen to initiate the process that will fix the cars' emissions systems."

The non-profit group which helped expose Volkswagen's deceit on emissions of its diesel cars in the United States said Monday that the same issue could exist in Europe.

In an interview with AFP, Drew Kodjak, executive director of the International Council on Clean Transportation, which works to reduce pollution in air, land and sea transportation, said the growing sophistication of cars heightens the risk of fraud and requires greater vigilance from regulators.

Q. Volkswagen has been accused in the United States of equipping its diesel cars with a computer program designed to evade official pollution controls. Could this be the case in Europe as well?

A. We certainly cannot rule out that this has been happening in Europe. Actually, it all started because we have done some testing of light-duty passenger vehicles in Europe, where we have found that real-world emissions of passenger car, namely diesel passenger cars, were significantly higher than what had been recorded in the official test procedure.

There might be many other explanations for this gap in Europe... We're working on it but it's not like we have the resources to figure it out by ourselves. It's up to the regulators in Europe to figure out whether or not there's a defeat device.

In the United States, our research triggered further investigation, but the defeat software was uncovered by the regulators.

Q: Why would Volkswagen equip its diesel cars this way?

A. If software programs are included to allow vehicles to go on a low emissions mode when on a test cycle and on high emissions and high efficiency mode during real-world operating conditions, it creates a competitive advantage for this manufacturer. It's also a very serious issue for air pollution and public health.

As motor vehicles have become more computerized, there are greater opportunities for manufacturers to code software to try to evade emissions standards. Regulators really need to be vigilant and make sure it doesn't happen.

Q: Were you surprised that Volkswagen took this risk of huge damage to its reputation and a potential $18 billion fine from the American authorities?

A. It's fair to say that we were surprised; we were not suspecting at all that there was a defeat device.

Volkswagen does have a strong environmental record. It was the first manufacturer to announce that it was going to comply with European CO2 standards ahead of schedule. So there's a lot of evidence that suggests that Volkswagen takes this issue seriously.

Throughout our research, we indeed got in touch with representatives of Volkswagen, who assured us that they were taking the matter very seriously.

Key facts about Volkswagen
Frankfurt (AFP) Sept 21, 2015 - German auto giant Volkswagen, the world's biggest carmaker in terms of sales, is embroiled in a major scandal after admitting that nearly half a million of its diesel cars in the United States were equipped with software that thwarts pollution tests.

Here are some key facts about one of the towering flagships of German industry.

- 'People's Car' to global player -

Volkswagen was set up in 1930s to build an affordable family car and the company name translates into "People's Car". The model that laid the foundation stone for the group's fortunes was the Beetle. The cult car, with its unmistakable, inimitable profile, began as a little twinkle in Adolf Hitler's eye who took it into his head in 1934 to make a reasonably priced car that all Germans could afford to own.

He commissioned Ferdinand Porsche with the design and construction of such a car, christened the "Kraft-durch-Freude-Wagen" (KdF) or "strength from joy car". Hitler not only had a factory erected especially to build it, but also an entire town as well, VW's hometown of Wolfsburg.

The "KdF" car was officially unveiled shortly before the war and Germans immediately fell in love with it.

Today, VW is a sprawling group with 12 very diverse brands, ranging from SEAT in Spain and Skoda in the Czech Republic to Lamborghini in Italy and Bentley in Britain. It also makes trucks under the MAN and Scania brands and boasts annual global sales of around 200 billion euros.

- Leadership battle -

In recent years, the company's fortunes have been steered by Ferdinand Piech, a member of the powerful Porsche dynasty that is a shareholder in the company. Piech is the grandson of the Beetle's inventor and was himself VW's chief executive between 1993 and 2002, before becoming its supervisory board chief.

In an ugly leadership battle earlier this year, Piech, 78, tried to oust one of his former proteges, Martin Winterkorn, 68, as chief executive because of the latter's difficulties in making substantial inroads into the US market, as well as VW's over-dependence on the Chinese market.

But other supervisory board members rallied behind Winterkorn, finally forcing Piech himself to resign in April.

Earlier this month, before the scandal broke, the six-member steering committee "voted unanimously" to propose to the 20-strong supervisory board at its meeting on Friday that Winterkorn's contract be extended until December 31, 2018.

But industry experts now suggest that the supervisory board may postpone its decision, at least until the affair is cleared up. And some analysts believe Winterkorn may end up losing his job altogether.

- Volkswagen struggles in US -

The German carmaker has long found it difficult to establish a strong foothold on the US market where it competes with giants such as Ford, General Motors and Toyota. North American sales account for just 9.4 percent of the group's global business, compared with 34.5 percent in China and 41.2 percent in Europe.

VW hoped that its diesel-powered cars would help it grow in the United States and it is aiming to double sales of its VW and Audi brands there to one million by 2018, not least on the back of a new, bigger sports utility vehicle to be launched in 2016.

Experts suggest the latest scandal could deal a lasting blow to VW's image in the US.

- Shareholder structure -

Volkswagen, which employs more than 590,000 people worldwide, is currently 50.7-percent owned by the holding company Porsche SE, which is in turn controlled by the Porsche and Piech families. The regional state of Lower Saxony where the carmaker is based holds a stake of around 20 percent, giving it a right of veto in strategic decisions.

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