VW reached a settlement with US and California authorities to recall 83,000 diesel cars with 3-liter diesel engines, resolving the last major part of its emissions cheating scandal.
The agreement, involving VW, Audi and Porsche cars, is another step towards allowing Volkswagen to put the emissions cheating scandal behind it.
In June the German auto maker agreed to a $15 billion settlement for another 475,000 vehicles affected by the scandal.
The Environmental Protection Agency (EPA) estimates that the total cost of the 3-liter settlement, including buybacks, repairs, and environmental remediation, at about $1 billion.
VW reached a $14.7 billion settlement with 550,000 owners of smaller, 2-liter diesel cars in September.
About one-quarter of the affected owners will be able to sell their vehicles back to VW at a price yet to be determined. The other 60,000 vehicles will be repaired at no cost to their owners, becoming fully compliant with clean-air laws.
US District Judge Charles Breyer said owners of the 3-liter cars made between 2009 and 2016 would get “substantial compensation” for having them fixed or repaired.
However, there were some remaining issues to be resolved and another hearing will be held on December 22, he said.
VW spokeswoman Jeannine Ginivan said the deal was “another important step forward in our efforts to make things right for our customers”.
The company admitted in September 2015 to installing secret software in 475,000 US 2-liter diesel cars to cheat exhaust emissions tests and make them appear cleaner in testing than they really were. They emitted up to 40 times the legally allowable pollution levels.
The $15 billion settlement in June covered those vehicles, including an offer to buy them all back.
The US Justice Department said VW had agreed to contribute another $225 million to a fund to offset excess diesel emissions.
In a separate filing, California’s government said VW would increase the number of electric vehicles it sells in the state.
Robert Bosch, the German engineering company that made the software for the VW diesels, has also agreed in principle to settle civil allegations at a cost of about $300 million.
According to Germany’s transport minister, around 98,000 VW petrol vehicles are caught up in the automaker’s latest emissions scandal.
That follows an admission by VW that it had found “irregularities” in CO2 emissions levels that could affect 800,000 vehicles.
It came to light as a result of an internal investigation by the firm following the diesel emissions scandal.
On November 3, VW admitted that an internal investigation had revealed that carbon dioxide emissions and fuel consumption were understated during standards tests on about 800,000 cars.
The company said the issue mainly affected diesel cars.
However, on November 4, Germany’s Transport Minister Alexander Dobrindt told the country’s parliament: “Today we were told that among the affected vehicles are 98,000 petrol vehicles”.
VW, Skoda, Audi and Seat vehicles could be affected and the company estimates the CO2 problem could cost it about €2 billion.
Volkswagen had already set aside €6.7 billion to meet the cost of the initial emissions scandal.
News of the issue with CO2 emissions sent VW shares down by 5.6% on November 4.
The company’s shares have lost about a third of their value since September, when the scandal first broke.
It came to light after the US Environmental Protection Agency (EPA) found VW software had detected when vehicles were undergoing emissions tests, and altered the way they operated to give more favorable results.
On November 2, the EPA also alleged that VW had fitted nitrogen oxide defeat devices on 3.0 liter diesel engines used in Porsche, Audi and VW vehicles – a claim VW denied.
Porsche also denied the allegations, but its North American division announced it is discontinuing sales of Porsche Cayenne diesel sport utility vehicles until further notice.
The carmaker is recalling 11 million diesel vehicles worldwide that were fitted with the software that circumvented tests for emissions of nitrogen oxide.
That recall is for cars with variants of the EA 189 diesel engine built to the “Euro 5” emissions standard.
Meanwhile, VW is recalling 92,000 cars in the US over a mechanical problem that could affect vehicles’ brakes.
The German carmaker said part of the camshaft could shear off, causing loss of vacuum in the power brakes, which could lengthen stopping distances.
Today’s recall includes Beetle, Golf, Jetta and Passat models from 2015 and 2016. The cars have 1.8 liter and 2 liter turbocharged petrol engines.
VW discovered the problem after getting reports of camshaft failures. A fix is expected by the end of March.
According to the Environmental Protection Agency (EPA), VW cars with bigger diesel engines also contained software devices designed to cheat in emissions tests.
Porsche, Audi and VW cars are all included in this new investigation, which affects at least 10,000 vehicles.
The EPA said that cars with 3.0 liter engines from the years 2014 to 2016 were affected.
However, VW denies the vehicles have software designed to cheat tests.
Instead the automaker says that cars with the 3.0 liter diesel V6 engines “had a software function which had not been adequately described in the application process”.
VW said it was cooperating with the EPA to “clarify the matter”.
“Volkswagen AG wishes to emphasize that no software has been installed in the 3-liter V6 diesel power units to alter emissions characteristics in a forbidden manner,” the company said in a statement.
Meanwhile, Porsche said it was “surprised” by the EPA’s allegations.
Photo Reuters
“Until this notice, all of our information was that the Porsche Cayenne diesel is fully compliant,” it said in a statement.
The EPA says the investigation is ongoing.
“VW has once again failed its obligation to comply with the law that protects clean air for all Americans,” said Cynthia Giles, assistant administrator at the EPA’s enforcement unit.
The EPA identified these diesel models as containing software aimed at cheating tests: 2014 VW Touareg; 2015 Porsche Cayenne; 2016 Audi A6 Quattro, A7 Quattro, A8, A8L and Q5.
In early September, VW admitted to the EPA that cars from the model years 2009 to 2015 contained software designed to cheat emissions tests.
It said that 11 million cars were affected.
That prompted US regulators to run further tests designed to detect such defeat devices and led to today’s announcement from the EPA.
“These tests have raised serious concerns about the presence of defeat devices on additional VW, Audi and Porsche vehicles. Today we are requiring VW Group to address these issues. This is a very serious public health matter,” Cynthia Giles said.
Regulators all over the world are now looking at VW’s diesel cars and the company is also facing criminal investigations.
State and federal prosecutors in the US have announced criminal investigations and German prosecutors are looking into the scandal.
VW CEO Martin Winterkorn resigned in late September as the scale of the scandal emerged.
At the time Martin Winterkorn said he was “not aware of any wrongdoing on my part” but was acting in the interest of the company.
Last month Volkswagen reported its first quarterly loss for at least 15 years after taking a big charge to cover the costs of the scandal.
VW said it had set aside €6.7 billion ($7.4 billion) to cover costs related to emissions cheating, which left it with a €2.52 billion pre-tax loss for the third quarter of the year.
Many analysts expect that VW will have to set aside more money to cover the recall of cars, penalties and lawsuits.
At least 2.1 million Audi vehicles worldwide were fitted with the software that allowed parent Volkswagen to cheat US emission tests, the company says.
Some 1.42 million Audi cars with so-called EU5 engines are affected in Western Europe, with 577,000 in Germany, and almost 13,000 in the US.
Affected models include the A1, A3, A4, A5, A6, TT, Q3 and Q5, an Audi spokesman told the Reuters news agency.
Separately, German prosecutors started a probe against VW’s former boss, Martin Winterkorn.
Martin Winterkorn will be investigated over “allegations of fraud in the sale of cars with manipulated emissions data,” German authorities said on September 28.
The scandal has badly tarnished VW’s name, left it exposed to up to $18 billion in US fines, and wiped a third off its stock market value in a week.
German authorities have demanded that VW set out a timeline by October 7 on how it will ensure its diesel cars meet national emission standards without using cheat technology.
There were widespread German media reports at the weekend that the government ignored warnings two years ago that VW was using the software.
Toyota is being caught in China’s anti-monopoly investigation.
The Japanese car maker said that Chinese regulators were looking into its Lexus luxury brand.
Audi, Chrysler and Mercedes-Benz are among carmakers and parts suppliers already under scrutiny for as-yet unspecified anti-competitive issues.
Toyota is being caught in China’s anti-monopoly investigation
A Toyota spokesman said the company was “co-operating fully with the queries from the authorities on Lexus”.
Although regulators have not set out the basis of their concerns, there have been reports in China of customers complaining about the high prices of imported vehicles and spare parts.
The technology and pharmaceutical sectors have also faced investigations in what analysts have said looks like an attempt to force down prices.
The investigations are being led by China’s National Development and Reform Commission (NDRC), which earlier this week raided a Mercedes office in Shanghai.
According to state news agency Xinhua, “inspectors are still collecting evidence and investigating whether Mercedes-Benz has used monopolistic tactics”.
Last month, China’s State Administration for Industry and Commerce – the body responsible for enforcing business laws – said it was looking into “alleged monopoly actions” by US tech firm Microsoft.
According to Global NCAP, five of India’s most popular small cars have failed crash tests.
The tests by Global NCAP showed that if involved in a crash, fatalities or serious injuries could result.
Among the cars tested was India’s talismanic Tata Nano, the world’s cheapest car, as well as models made in India by Ford, Volkswagen and Hyundai.
The cars were apparently stripped of safety features to make them cheaper for Indian buyers, correspondents say.
The five models accounted for 20% of all sales in the country last year. Estimates say that about 80% of the cars sold in India have price tags of under $8,000.
“It’s worrying to see levels of safety that are 20 years behind the five-star standards now common in Europe and North America,” said the head of NCAP Global, Max Mosley, the former chief of international motorsport.
Those car manufacturers who have spoken out since the safety tests have insisted that safety is of paramount importance and that they will be reviewing the NCAP’s test results.
The car safety watchdog put five models through crash tests, including the Suzuki-Maruti Alto 800, the Tata Nano, Ford Figo, Hyundai i10 and Volkswagen Polo.
India Hyundai i10 scores zero stars in Global NCAP crash tests
None of these entry-level cars sold in India are fitted with air bags. They also lack the safety standards that the same models have when sold in North America and Europe, according to the watchdog.
“Poor structural integrity and the absence of airbags are putting the lives of Indian consumers at risk. They have a right to know how safe their vehicles are and to expect the same basic levels of safety as standard as customers in other part of the world,” Max Mosley added.
As a result of the tests, Volkswagen has withdrawn its Polo model without airbags.
Volkswagen also said the airbags, as well as anti-lock brakes, would become standard from 1 February along with a 2.7% price increase to offset the costs, the Associated Press reports.
“We are proud to be leading the cause of driver safety,” Arvind Saxena told AP.
Tata has said it is looking at the Nano’s structure for ways to improve its strength, having already added power steering and other features, AP adds.
India also has more road accident deaths than any other country – put down to bad roads, poor driving but also it appears unsafe cars.
Every year, tens of thousands of people are killed on the country’s roads and the numbers have been rising steadily – nearly 140,000 people were killed in 2012, according to the government’s National Crime Records Bureau.
According to NCAP, it is estimated that 17% of these deaths are of car passengers.
Porsche, Audi and Bentley – Volkswagen’s luxury brands – have posted record sales in 2013 helped by new model launches and a recovery in the global car market.
Porsche’s deliveries jumped 15%, Audi’s 8.3% and Bentley posted a growth of 19% in 2013, from a year earlier.
Demand for luxury cars has been growing in emerging markets such as China and India amid rising income levels.
Carmakers have also benefited from a recovery in demand from the US, one of the biggest markets for luxury cars.
Audi’s sales jumped 13.5% in the US during the period, from a year ago, while Porsche saw a growth of 21%. Bentley deliveries in the US rose 28%.
China was the other major growth market for the firm, with both Audi and Porsche posting nearly 20% growth.
However, Bentley’s sales in China declined 3% from a year ago.
Porsche, Audi and Bentley have posted record sales in 2013 helped by new model launches and a recovery in the global car market
VW has set its sights on becoming the world’s biggest carmaker by 2018.
The latest figures are likely to provide a big boost to VW’s ambitions.
Overall, Audi sold 1.57 million cars and sport-utility vehicles globally last year, Porsche sold 162,145 vehicles and Bentley’s sales totaled 10,120 units.
“We set an important milestone for Audi in the past year: We achieved our intermediate strategic goal of 1.5 million deliveries two years earlier than planned, and in fact comfortably exceeded it,” Rupert Stadler, chairman of Audi, said in a statement.
“This means that in the past four years alone, Audi has attracted more than 600,000 new customers.”
The numbers by Volkswagen come at a time when the global car market has been recovering from the slump seen in the years after the global financial crisis.
Data released on Thursday showed that car sales in China – the world’s biggest car market – rose 14% in 2013, from a year ago. That compares to an annual growth rate of less than 5% seen in the previous two year.
According to the China Association of Automobile Manufacturers 21.98 million vehicles were sold in China last year.
Analysts also expect 2013 to be the best year for US auto market since 2007, with total annual sales expected to reach nearly 15.6 million units.
If that figure is met, it would mark a strong recovery from 2009 when sales fell to 10.4 million during the depths of the recession.
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