Volkswagen readies $7.4bn fund to cover 11m car diesel cheat

Chris Davies - Sep 22, 2015, 9:43 am CDT
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Volkswagen readies $7.4bn fund to cover 11m car diesel cheat

Volkswagen‘s emission woes continue, with the company conceding that its diesel dodge impacts 11 million cars worldwide. In a statement today, the automaker revealed that cars – including those under its own badge, and select Audi models using the same TDI engine – across the world used the same software that effectively allowed the powertrain to cheat during emissions testing.

The fallout from the revelation has already proved significant. The Environmental Protection Agency has announced it will now be retesting the company’s other powertrains to see if they, too, exhibit the same issues.

Meanwhile, the US and German governments are each starting an investigation into what exactly went on.

Initially, VW said that nearly 500,000 cars in the US were affected by the engine mapping, which switched into a low fuel rate mode when it guessed the car was undergoing emissions testing. On the road, however, in more typical conditions, the car would run as normal, but putting out NOx emissions as much as 35x the Clean Air Act standards allow, according to independent testing.

Volkswagen insists that, while the software might be shared, the diesel cars internationally “comply with legal requirements and environmental standards,” presumably because the NOx limits under those standards differ from the EPA’s.

It also points out that the problem doesn’t impact “handling, consumption or emissions” in an attempt at reassurance that VW claims gives “clarity to customers and dealers.”

All the same, it’s set to be an expensive fix. VW has set aside 6.5bn Euros, or around $7.35bn, to implement whatever solution it comes up with along with trying other ways to win back customer trust.

Depending on the outcome of the investigations, “the amounts estimated may be subject to revaluation” Volkswagen warned.

It’s not what investors wanted to hear. Shares of VW’s stock fell around 20-percent on Monday, and are already down a further 24-percent at time of publication today. If the trend continues, the fall could see company stock at its lowest since September 2011.

There has also been speculation that VW’s CEO, Dr. Martin Winterkorn, will resign as a result.

If you’re a Volkswagen driver, there’s more on what you need to know about the emissions issue in our guide.

SOURCE Volkswagen


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