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VW CEO: 'I am endlessly sorry' brand is tarnished

http://news.yahoo.com/vw-cooperating-german-investigation-vehicles-071839997--finance.html

By DEE-ANN DURBIN and GEIR MOULSON
9 hours ago

DETROIT (AP) — Volkswagen AG's smog-test scandal escalated Tuesday as the company acknowledged putting stealth software in millions of vehicles worldwide. The crisis has already cost VW more than 24 billion euros ($26 billion) in market value.

The world's top-selling carmaker now admits that 11 million of its diesel vehicles contain software that evades emissions controls, far more than the 482,000 cars identified by the U.S. Environmental Protection Agency as violating clean air laws.

Volkswagen set aside an initial 6.5 billion euros ($7.3 billion) to cover the fallout and "win back the trust" of customers. It also said this year's profit projections will change, and warned that future costs remain undetermined.

CEO Martin Winterkorn apologized for the deception under his leadership and pledged a fast and thorough investigation, but gave no indication that he might resign. Meanwhile, Volkswagen's ordinary shares fell another 20 percent Tuesday, to close at 111.20 euros.

"Millions of people across the world trust our brands, our cars and our technologies," Winterkorn said Tuesday in a video message. "I am endlessly sorry that we have disappointed this trust. I apologize in every way to our customers, to authorities and the whole public for the wrongdoing."

"We are asking, I am asking for your trust on our way forward," he said.

That may be a tall order for people who bought "clean diesel" VWs believing they could get peppy rides but still be environmentally friendly.

"I thought I was doing something good and not something bad," said Zandy Hartig, an actress in Los Angeles who bought a diesel-powered Jetta Sportswagen in 2013.

She plans to get it repaired, but says she'll never buy a Volkswagen again. "It's not a design flaw. It's deliberately manipulating the system, and it's quite evil," Hartig said.

VW has yet to explain who installed the software, under what direction, and why.

"I do not have the answers to all the questions at this point myself, but we are in the process of clearing up the background relentlessly," Winterkorn said.

The EPA said Friday that VW faces potential fines of $37,500 per vehicle, and that anyone found personally responsible is subject to $3,750 per violation.

In theory, the penalties could total $18 billion or more, although companies rarely pay maximum fines in the U.S.

"I don't think this is a life-threatening event, but it's clear it's going to be very expensive," said Christian Stadler, who teaches strategic management at the Warwick Business School.

Volkswagen blamed unrelated issues for more than a year while the EPA and California regulators asked why its cars were running much dirtier on the road. The agencies refused to approve 2016 models without an answer.

Only then did VW acknowledge that software switches its engines to a cleaner mode during official emissions testing. The "defeat device" then switches off again, giving the cars more power while emitting as much as 40 times the legal pollution limit during actual driving, the EPA said.

"Let's be clear about this. Our company was dishonest. With the EPA, and the California Air Resources Board, and with all of you. And in my German words, we have totally screwed up," the head of Volkswagen's U.S. division, Michael Horn, said Monday while unveiling a new Passat model in New York.

Across the sector, investors wondered how far this scandal could grow. Germany's Daimler AG, the maker of Mercedes-Benz cars, was down 7 percent Tuesday, while BMW AG fell 6 percent. France's Renault SA was 7.1 percent lower.

"Brands are all about trust and it takes years and years to develop. But in the space of 24 hours, Volkswagen has gone from one people could trust to one people don't know what to think of," said Nigel Currie, an independent U.K.-based branding consultant.

Volkswagen's stock plunged again Tuesday after the company said similar "discrepancies" in Type EA 189 engines involve some 11 million vehicles worldwide — more than the 10 million or so cars it sold last year.

It also said new vehicles with EU 6 diesel engines currently on sale in the European Union comply with legal requirements and environmental standards.

The company hasn't revealed the results of internal investigations, beyond announcing the much wider impact on Tuesday.

"I hope that the facts will be put on the table as quickly as possible," German Chancellor Angela Merkel said in Berlin.

It may already be too late for people like Peggy Schaeffer, a librarian from Durham, North Carolina, who bought her diesel Jetta Sportwagen in 2010. She had liked Volkswagens, and "until this week, I was completely happy with it," she said.

Now, she's dismayed to know that during a recent cross-country trip, she was "polluting all the way." And if Volkswagen's eventual repair diminishes her car's sportiness or fuel efficiency, she's not sure she wants it.

"I really feel like I've been had. I've been hoodwinked. This is deliberate fraud and deceit," she said.

Winterkorn became CEO in 2007. The software was installed starting with 2009 models. He was looking forward to getting a two-year contract extension, keeping him in charge through 2018, at the company's regular board meeting Friday. Some board members reportedly planned a crisis meeting Wednesday.

Other authorities looking into VW's actions include Germany, where the transport minister announced a commission of inquiry to determine whether VW's diesel vehicles comply with German and European rules; the French government, which demanded that its automakers "ensure that no such actions are taking place in France," the South Korean government and the European Commission. The U.S. Justice Department is involved, and New York's attorney general also announced a multi-state investigation on Tuesday.

___

Dee-Ann Durbin reported from Detroit, Geir Moulson from Berlin and Pan Pylas from London.

Quite the scam. Jeez!

One of the Yahoo comments, from "Jake S," underneath the article:

"Millions of people across the world trust our brands, our cars and our technologies,"

And they're all been played. I used to work in a garage and we HATED working on VWs. They required so many "specialty tools." For example, you'd have to fork out $800 on a tool only VW sold just to change brake pads. They played the game very well. If you were a VW car owner, you'd basically have to take your car to a dealership and spend double or triple what a corner shop would charge because they turned making bogus proprietary fasteners into an art form, when the standard fasteners everyone else was using would have worked just fine. I used to love working on the old Bugs, Buses and Rabbits, but after the Jetta came out, VW shoved its middle finger into all of its customers faces and laughed. I'm glad they got caught with their hands in the cookie jar this time and I hope they pay dearly.

Farfromtruthin

Yeah, that CEO might want to start working on his golden parachute exit-strategy.

It kinda trips me out he (or they) didn't think they wouldn't eventually get caught.

got busted. 23 percent drop.

At this years Volkswagen "Sign and Drive" event, be sure and sign someone else's name.

Am I the only one that's actually impressed at the brazenness of the VW leadership to try and pull a fast one on the EPA?

so i can use your name? thanks bro

I would think you'd sign R. Eefer.

I wonder when would be the ideal time to buy VW stock.

I'm considering converting a cheap diesel over to vegetable oil for fun. Might avoid a VW since I'm in cali, not sure what crap the smog test people might give me now.

My question is...

So now what happens? If you own a VW Diesel, you will not pass the emissions testing because they know it is rigged. You can't get it
fixed because the technology doesn't exist to make your vehicle compliant. You can't sell your car because that is fraud.

Is it now junk?

if you live in a state that doesn't do emissions checks, then you're good.

CEO just stepped down:
http://news.yahoo.com/latest-vw-hit-lawsuits-over-emissions-scandal-102658622--finance.html

yea i just submitted my resume, wish me luck.

Oregon smog tests vehicles. There are a ton of VWs on the road out here. This will be interesting to see how it plays out.

I think the first sign something was up was when the CEO said he wouldn't stand behind his cars.

Very dry but good.

Buy at 60.

Doesn't VW own Lambourghini? If you get the job can you get me a job test driving Lambourghinis?

On a serious note, what was there to gain from this? I genuinely don't see what on earth the benefit could have been to risk this.

they own Audi, Bentley, Bugatti, Lamborghini, Porsche, for the brands that are sold here in the US.

just spit balling here, but VW pretty had the clean diesel market on lock, as far as very affordable cars are concerned.

they needed to meet EPA regulations, but they couldn't do that AND maintain the performance they were advertising, so they just straight up cheated.

Stricter emissions standards are on Obama's agenda, who's next? Ford, Chevy, pedestrians?

Cows and GM farts are next.

VW sucks. I had a Passat and it broke down a lot.

Yeah, he started it all by demanding catalytic converters and unleaded gas back in 1986. It's all cause of Obama that VW cheated the law.

Yup, it was to begin with.

Not even one page in. It's all on Obama.

1976 was the correct year

Wow what a total and complete scam. I hope this hurts their profits for awhile...

They made more profit when building Hitler's Tanks!

Coca Cola made a nice profit off Fanta in Nazi Germany, too. If there's a way to make money, which is the bottom line, principles and ethics mean little.

This, however, is about one of the dumbest, most poorly calculated risks in the history of the industry.

You get a lot of problems with the imports and routine maintenance. I have a buddy who owns a Suburu, and something as simple as oil changes, he has to go directly to the dealership because- especially in our smaller town- mechanics don't want to work on them. I think it's the flex pipe that's wrapped around the oil filter in about the most damn inconvenient way imaginable that there's no way to work around it without getting real bad burns. With the gains in quality made by the domestic manufacturers, I'm not sure most imports are really worth the added price considering how jacked up the rates for parts and labor can be on them.

Eh, I don't think Millcreek is wrong here. The whole notion of "Diesel Exhaust Fluid" (the thing behind the VW issue) didn't even come about until 2008, and became much more extensive after Obama's 2010 directives to the EPA. New CAFE standards have also helped drive adoption of new systems such as Ford's Ecoboost line in their cars and trucks.

and guess what? those other car companies MET those requirements and are selling very well right now.

I'm sick of the hypocrisy. damn near everybody on this board complains that obama doesn't lead, the US doesn't lead.

We Obama is trying to lead in the clean energy industry and setting better standards for more fuel efficient cars, yet all people can do now is complain. We're suppose to set the standard for the world in innovation.

we're trying to achieve that, and all anybody wants to do is complain that we're leading from the front.

We lost our backbone and pride alright, but it isn't from my generation, is from the generations before me that can't adapt worth a damn.

What a really dumb thing for them to do.

Didn't Toyota rebound after their sticking gas pedal problem? Sure, that was a design flaw, not this deliberate cheat of the buying public. Wow. Talk about an absolute idiotic decision.

Diesel is not a clean fuel and when people throw out words like "clean burning diesel" and "clean burning coal" I just have to giggle at their attempted deceit and say nice try.

The EPA won't be guessing that now.

Thought I'd post a little background on the issue.


http://www.reuters.com/article/2015/09/24/us-usa-volkswagen-letters-exclusive-idUSKCN0RO0BD20150924

In April of 2015, Volkswagen of America, Inc.(VOWG_p.DE) sent letters to California owners of diesel-powered Audis and Volkswagens informing them of an “emissions service action” affecting the vehicles.

Owners were told they would need to take their cars to a dealer for new software to ensure tailpipe emissions were "optimized and operating efficiently."

The company didn’t explain that it was taking the action in hopes of satisfying government regulators, who were growing increasingly skeptical about the reason for discrepancies between laboratory emissions test results and real world pollution from Volkswagen’s diesel cars.

Officials at the California Air Resources Board and the EPA agreed in December of 2014 to allow a voluntary recall of the company’s diesel cars to fix what Volkswagen insisted was a technical – and easily solved - glitch. The recall was rolled out nationally over a period of months.

On Wednesday, California Air Resources Board spokesman Dave Clegern confirmed that the letters were part of that recall. “This is one of the fixes they presented to us as a potential solution. It didn’t work,” he said.

Volkswagen, which had no obligation at the time it initiated the recall to disclose the discussions that had led to it, declined to comment on the letter.

The controversy came to public attention last week after Volkswagen acknowledged it had deliberately deceived officials about how much its diesel cars polluted.

The recall letter instructed owners of certain 2010-2014 Volkswagen vehicles with 2-liter diesel engines to contact dealers for a software update in order to fix an issue with the malfunction indicator light illuminating.

“If the [light] illuminates for any reason, your vehicle will not pass an IM emissions inspection in some regions,” the letter warned, noting that California required the update before it would renew vehicle registrations.

"The vehicle's engine management software has been improved to assure your vehicle's tailpipe emissions are optimized and operating efficiently," read the letter, which said an earlier software update increased the likelihood of the light illuminating.

It is customary for carmakers to perform updates to their cars through dealerships to fix or update software.

Volkswagen has said that 11 million of its cars around the world could be affected in the scandal that broke last week. The German company has set aside 6.5 billion euros ($7.3 billion) in its third-quarter accounts to help cover the costs of any fallout.

The U.S. Justice Department has launched a criminal probe and at least 25 proposed class actions on behalf of consumers have already been filed in seven states.

Are they? We've just determined one maker did NOT meet these requirements! This is still very early, and VW is not the only one the EPA has slapped in regards to emissions. Ford was fined for loopholing the law a few years ago and Hyundai had to reduce their MPG ratings. These days most drivers care only about the MPG rating, so if you can claim best in class you will get the sales that come with that pinnacle. This investigation may cause the EPA to re-evaluate several diesel lineups and VW will probably not be the only one found playing with the numbers. Remember EPA ratings are *self tested*.

If other makers are found to be playing the game, I think this will kill diesel again.

And Ford rebounded after having two vehicles that were known to kill people (Exploder and Pinto). Heck Ford may be the most forward looking american car company right now and they have stolen away many prior foreign car owners over the last 5 years.

The reason I'm less optimistic about VW is because they staked their entire company on clean diesels. This is going to really cut into their bottom line.