US Volkswagen chief admits he knew of emissions problem in 2014
Volkswagen’s US chief Michael Horn revealed he knew more than a year ago that the group’s cars possibly breached pollution rules, as he prepared to apologize before Congress over the massive scandal on Thursday.business Updated: Oct 08, 2015 17:39 IST
Volkswagen’s US chief revealed he knew more than a year ago that the group’s cars possibly breached pollution rules, as he prepared to apologize before Congress over the massive scandal on Thursday.
In testimony released ahead of his hearing before a Congressional committee, Michael Horn offered a “sincere apology” over Volkswagen’s use of a software designed to cheat pollution tests.
The German auto giant has sunk into the deepest crisis of its history after revealing that it equipped 11 million of its vehicles worldwide with software that switches the engine to a low-emissions mode during tests.
The so-called defeat devices then turn off pollution controls when the vehicle is on the road, allowing it to spew out harmful levels of toxic gases.
The shocking revelations have wiped more than 40% off Volkswagen’s market capitalization, but the direct and indirect costs are still incalculable as the company risks fines in several countries and possible damages from customers’ lawsuits.
Horn said he learnt in early 2014 of “a possible emissions non-compliance”, after researchers at the University of West Virginia found that VW cars it tested were releasing up to 40 times as much nitrogen oxide as was legally permissible.
He said he was told by his staff then that US authorities could conduct tests for so-called “defeat devices”, which switches the car to a low emissions mode when cars are undergoing tests.
The US boss for Volkswagen said he was informed later that year that technical teams had a plan to bring the vehicles into compliance, and that they were working with the authorities on the process.
Volkswagen finally admitted to US regulators in September this year that hidden software installed in certain diesel vehicles “could recognize whether a vehicle was being operated in a test laboratory or on the road,” Horn said.
Admitting that the company had “broken the trust of our customers, dealerships, and employees, as well as the public and regulators,” Horn vowed to hold those responsible accountable.
Separately, VW Korea president Thomas Kuehl was also due to be grilled in the South Korean parliament on Thursday afternoon, according to state broadcaster KBS.
“I sincerely apologize over betraying customers’ trust”, Volkswagen Korea president Thomas Kuehl said in a newspaper advertisement in South Korea.
At home in Germany, Volkswagen’s new chief Matthias Mueller has said four employees have been suspended over the deception, adding however that he did not believe that top management could have been aware of the scam.
Mueller said in an interview with the Frankfurter Allgemeine Zeitung that “four people, including three responsible directors on different levels of the development of Volkswagen engines,” had been suspended over the deception, adding that “others were already on partial retirement”.
He said however that the development of an engine is “a complex process” but that these were tasks in which “a director is not directly involved”.
“Do you really think that a boss would have the time to be concerned about the details of engine software?” he said.
Claims emerged in media reports on Thursday that the group had not only deliberately fitted the cars sold on the US market with the defeat devices, but had also intentionally sought to cheat tests in Europe by doing so with vehicles sold on the continent.
“In Europe too, Volkswagen effectively cheated on emissions in a systematic manner,” newspaper Sueddeutsche Zeitung claimed, citing its own research in collaboration with public broadcasters NDR and WDR.
It added that “without the cheating software, the affected cars would not have been authorised under the Euro 5 emissions regulation”.
The car group, which submitted its plans and timetable to bring vehicles to compliance to German authorities on Wednesday, is planning to begin recalling affected vehicles from January.
But it admitted that it would only be able to complete the refitting by the end of next year.
The group has set aside 6.5 billion euros in the third quarter over the affair, but that was only the estimated sum to cover repairs of affected vehicles. The cost of fines and potential damages arising from lawsuits is hard to calculate.
In the United States alone, Volkswagen faces up to $18 billion in fines from the Environmental Protection Agency, plus potential payouts from class action lawsuits and penalties from other regulators.
Asked about the looming fines, Mueller said, however: “Think about this: no one died from this, our cars were and are safe.”