Volkswagen shares skid 20pc on false emission scam in US

Volkswagen apologises for emissions blunder

AFP, FRANKFURT: Shares in German auto giant Volkswagen plummeted more than 20 per cent yesterday after it emerged that nearly half a million of its diesel cars in the United States had been fitted with software that falsified emissions data.
By late morning on the Frankfurt stock exchange, VW shares had fallen by more than 20 per cent to 126.35 euros, dragging down the entire market.  The scandal, which came to light on Friday, could lead to financial fines of up to $18 billion for the carmaker as well as threatening the brand’s image in the United States and the rest of the world. It is unknown how far the scandal may spread.
South Korea’s Yonhap news agency said the country will conduct emissions tests on three Volkswagen car models in mid-October to check for similar deception.
According to the US authorities, VW equipped 482,000 cars in the United States with a sophisticated software that turns off emissions controls when driving normally and turns them on only when the car is undergoing an emissions test.  
Unknown to drivers, the software detects when the car is undergoing an emissions test and then activates an internal mechanism to limit the pollutant gases. This allows the car to pass the test, earning a certificate of good environmental performance.
But once the test is over, the mechanism de-activates itself, releasing pollutant gases into the air, such as nitrogen oxides that are linked to severe respiratory ailments such as asthma.  “Using a defeat device in cars to evade clean air standards is illegal and a threat to public health,” said Cynthia Giles, enforcement officer at the US Environment Protection Agency (EPA), describing the allegations as “very serious matters.”
In a statement on Sunday, VW said that the EPA and the California Air Resources Board (CARB) had found that while testing diesel cars of the Volkswagen group they had “detected manipulations that violate American environmental standards.”
VW chief executive Martin Winterkorn issued an apology and said the group had ordered an external investigation into the matter.
“The board of management takes these findings very seriously. I personally am deeply sorry that we have broken the trust of our customers and the public. We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly and completely establish all of the facts of this case,” Winterkorn said. “We at Volkswagen will do everything that must be done in order to re-establish the trust that so many people have placed in us, and we will do everything necessary in order to reverse the damage this has caused. This matter has first priority for me, personally, and for our entire board of management,” Winterkorn said.
The deception was uncovered by the “dogged” perseverance of the non-governmental organisation International Council on Clean Transportation, which alerted researchers at the University of West Virginia. After independent tests, the researchers uncovered anomalies between actual and reported gas emissions.  The EPA ordered VW to recall the vehicles concerned—four-cylinder VW and Audi diesel cars built since 2008 -- and “fix the cars’ emission systems.”  Under the US Clean Air Act, fines of up to $37,500 can be imposed on each car, meaning VW could be fined more than $18 billion.
Stefan Bratzel at the Center for Automotive Management, said the damage to VW’s image would be just as big as the financial fines.
Now questions would be asked whether the manipulation was going on “not just in the US, but in Europe, too,” the expert said.
“VW wanted to establish diesel-powered cars in the US market. That’s over now. This wreaks enormous damage on the brand,” Bratzel said.
Another leading German auto expert, Ferdinand Dudenhoeffer, agreed.  “It will be tough for VW to regain its credibility in the US after this incident,” he said.
He suggested it could cost chief executive Winterkorn his job, too.
Winterkorn, 68, has been chief executive since 2007, but was earlier this year involved in an ugly leadership battle with then supervisory board chief and VW patriarch Ferdinand Piech.  It was Piech who installed Winterkorn as chief executive in 2007.
But he appeared to have become irked by his former protege’s difficulties in making substantial inroads into the US market, as well as VW’s over-dependence on the Chinese market and the waning attractiveness of its core Volkswagen brand.

Volkswagen shares skid 20pc on false emission scam in US

Volkswagen apologises for emissions blunder

AFP, FRANKFURT: Shares in German auto giant Volkswagen plummeted more than 20 per cent yesterday after it emerged that nearly half a million of its diesel cars in the United States had been fitted with software that falsified emissions data. By late morning on the Frankfurt stock exchange, VW shares had fallen by more than 20 per cent to 126.35 euros, dragging down the entire market. The scandal, which came to light on Friday, could lead to financial fines of up to $18 billion for the carmaker as well as threatening the brands image in the United States and the rest of the world. It is unknown how far the scandal may spread. South Koreas Yonhap news agency said the country will conduct emissions tests on three Volkswagen car models in mid-October to check for similar deception. According to the US authorities, VW equipped 482,000 cars in the United States with a sophisticated software that turns off emissions controls when driving normally and turns them on only when the car is undergoing an emissions test. Unknown to drivers, the software detects when the car is undergoing an emissions test and then activates an internal mechanism to limit the pollutant gases. This allows the car to pass the test, earning a certificate of good environmental performance. But once the test is over, the mechanism de-activates itself, releasing pollutant gases into the air, such as nitrogen oxides that are linked to severe respiratory ailments such as asthma. Using a defeat device in cars to evade clean air standards is illegal and a threat to public health, said Cynthia Giles, enforcement officer at the US Environment Protection Agency (EPA), describing the allegations as very serious matters. In a statement on Sunday, VW said that the EPA and the California Air Resources Board (CARB) had found that while testing diesel cars of the Volkswagen group they had detected manipulations that violate American environmental standards. VW chief executive Martin Winterkorn issued an apology and said the group had ordered an external investigation into the matter. The board of management takes these findings very seriously. I personally am deeply sorry that we have broken the trust of our customers and the public. We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly and completely establish all of the facts of this case, Winterkorn said. We at Volkswagen will do everything that must be done in order to re-establish the trust that so many people have placed in us, and we will do everything necessary in order to reverse the damage this has caused. This matter has first priority for me, personally, and for our entire board of management, Winterkorn said. The deception was uncovered by the dogged perseverance of the non-governmental organisation International Council on Clean Transportation, which alerted researchers at the University of West Virginia. After independent tests, the researchers uncovered anomalies between actual and reported gas emissions. The EPA ordered VW to recall the vehicles concernedfour-cylinder VW and Audi diesel cars built since 2008 -- and fix the cars emission systems. Under the US Clean Air Act, fines of up to $37,500 can be imposed on each car, meaning VW could be fined more than $18 billion. Stefan Bratzel at the Center for Automotive Management, said the damage to VWs image would be just as big as the financial fines. Now questions would be asked whether the manipulation was going on not just in the US, but in Europe, too, the expert said. VW wanted to establish diesel-powered cars in the US market. Thats over now. This wreaks enormous damage on the brand, Bratzel said. Another leading German auto expert, Ferdinand Dudenhoeffer, agreed. It will be tough for VW to regain its credibility in the US after this incident, he said. He suggested it could cost chief executive Winterkorn his job, too. Winterkorn, 68, has been chief executive since 2007, but was earlier this year involved in an ugly leadership battle with then supervisory board chief and VW patriarch Ferdinand Piech. It was Piech who installed Winterkorn as chief executive in 2007. But he appeared to have become irked by his former proteges difficulties in making substantial inroads into the US market, as well as VWs over-dependence on the Chinese market and the waning attractiveness of its core Volkswagen brand.