Dieselgate: Euro governments probe VW

Individual European governments are now piling in to the Dieselgate crisis engulfing Volkswagen -- and even a new Chief Executive Officer can’t appease a furious German Stock Exchange.

What’s worse, a full week after Volkswagen confessed that it had specially written software for its 2.0-litre EA189 diesel engines to cheat on US emissions laws, the company still can’t find the majority of the 11 million affected cars.

Besides telling customers that it was working on a fix, the car-making giant, the biggest in the world in the first half of 2015, has yet to announce a recall or an update on any of the cars, sold between 2009-13.

VW has left governments and Transport departments around the world waiting for answers as it struggles to corral the details of which of its diesel-powered cars were using the “cheat” codes in the Bosch EDC 16 engine management system… And which, if any, were not.

Germany’s Transport Minister, Alexander Dobrindt, today confirmed that not only were 2.8 million Volkswagens sold in Germany with the cheat code, but that the net had widened to include the 1.2-litre diesel engines in the Polo and the Up!. Volkswagen commercial range including the Transporter and the Amarok are now also implicated.

Volkswagen has confirmed it will recall the nearly half a million cars fitted with the “cheat” code, which only properly cleans nitrogen oxide tailpipe emissions when it thinks it’s being emissions tested in a laboratory, but only when it has a fix ready to go.

The company has already recalled affected US turbo-diesel models once (in December 2014). This was in a failed attempt to make the EPA compliant to guarantee the certification of its new 2016 models.

Fed up with poor response from Volkswagen, governments from the UK, Italy, Norway, Germany, France, South Korea, the Czech Republic and Canada have announced their own criminal investigations. In turn, the European Commission is under pressure to accelerate the planned 2017 rollout of the real-world fuel-economy and emissions tests.

Emissions-test enquiries have been invited by the European Union and launched in Germany and in the UK to check the entire car industry’s emissions are sold to customers as advertised.

“We invite all member states – in addition to the ones who are already doing so – to carry out all the necessary investigations,” the European Commission (the EU’s administrative branch) said in a statement.

“We need to have the full picture of whether and how many vehicles certified in the EU were fitted with defeat devices, which is [sic] banned by EU law.”

The UK is joining Germany in asking its validation and certification authorities to rerun laboratory tests, but to calibrate them against parallel real-world tests.

“The Vehicle Certification Agency, the UK regulator, is working with vehicle manufacturers to ensure that this issue is not industry-wide,” UK Transport Secretary, Patrick McLoughlin, told the BBC.

“As part of this work they will re-run laboratory tests where necessary and compare them against real-world driving emissions.

“We have called on the EU to conduct a Europe-wide investigation into whether there is evidence that cars here have been fitted with defeat devices.

“My priority is to protect the public as we go through the process of investigating what went wrong and what we can do to stop it happening again in the future.”

It’s not just Europe, though. An embittered US EPA is planning a massive overhaul of how it tests diesel engines.

Fooled for seven years by Volkswagen and stalled for another year and half, the agency was adding on-road tests to its protocol, even though diesel passenger cars make up less than a 1% of total sales.

The Italian Government has gone further, announcing a series of spot-checks of 1000 diesel cars in showrooms before they even get into the hands of customers.

Even cars that currently pass all EU and Italian emissions rules will be included in the random sweep, which will cost more than €8000 a car. On top of that, Italian consumer group, Altroconsumo, has planned a class-action suit against Volkswagen and demanded the company correct the software or directly swap the affected vehicles for new, compliant versions.

For all intents and purposes, it seems Volkswagen either doesn’t know or isn’t saying which countries have cars installed with the defeat devices, or how many.

Even with new CEO Matthias Müller installed today by the Supervisory Board, Volkswagen has progressed no further in its customer relations than to tell people they’re aware of the problem, the cars are safe to drive and they’ll get to them when there’s a fix.

Given that there are three different generations of the EA189 motor involved in the cheat, it might need three different engineering fixes which will take time and money.

Today’s announcement by Germany’s Transport Minister has sent Volkswagen shares, which had clawed back a few percent on the news of its new CEO, tumbling again. The shares fell another 5% on Friday.

Volkswagen’s critical Supervisory Board meeting dragged long yesterday, with crisis after crisis confronting it since the departure of CEO Dr Martin Winterkorn on Tuesday.

Yet Dr Winterkorn may not be completely gone, with reports from Germany insisting he wishes to remain CEO of Porsche Holdings, the Porsche and Piech family company that controls 50.7% of Volkswagen’s voting shares. That would put Dr Winterkorn in a position to retain control over incoming Supervisory Board Chairman, Hans Dieter Pötsch, which other board members might find unsavoury.

German publication Spiegel yesterday called into question the former CEO’s claim that he knew nothing of the cheat code, pointing out that it ran a story on the discrepancies between the laboratory and real-world test results in September 2014.

The list of unanswered questions continues to grow, including:

How many cars are fitted with the Bosch EDC 16 engine management computer?

Are all Bosch EDC 16 engine management computers fitted with the cheat code?

Are the V6 diesels in Audi and Porsche models affected, given they used the Bosch EDC 16 engine management computer?

Why did Volkswagen wait 15 days to go public with the cheat after it confessed to the US EPA on September 3?

Can Volkswagen guarantee the cheat code is not on the new 2.0-litre turbodiesel EA288 motors in the latest generation of Volkswagen Group cars?

Who is the Supervisory Board pointing its finger at with its internal criminal probe?

The only piece of good news for the German carmakers is that AutoBild magazine has withdrawn its allegation that BMW had also installed a cheat code in the software of the X3 xDrive 20d to beat emissions laws. It had claimed the same test protocols that caught Volkswagen out saw the X3 emissions come in 11 times higher than in the laboratory.

BMW denied the claim, insisting, like Daimler that its cars performed identically via the same software under all circumstances.

AutoBild withdrew the allegation, but not before BMW shares had plummeted 9% on fears that the cheating was systemic across the German industry. They rebounded by five percent on Friday.

Whodunnit continues...
Meantime, Volkswagen is insistent that it will get to the bottom of who was behind the diesel engine software cheat that effected 11 million cars and wiped more than €30 billion off its value.

The thing is, it can’t be that hard to at least find a good place to start.

It has suspended Porsche Development Director, Wolfgang Hatz, Audi Development Director, Ulrich Hackenberg, and Volkswagen’s Director of Development, Hans-Jakob Neusser -- all on the basis that if they didn’t know about the sneaky software code, they should have.

But another good place for investigators to start looking might be a two-part feature article written by Volkswagen itself in respected German engineering magazine MTZ back in 2008.

The article talks about how they made the turbodiesel 2.0-litre four-cylinder EA189 engine compliant with the world’s toughest emissions laws, those of the USA. It talks about new control algorithms and exhaust cleaning systems for the engine.

All of these things are highly relevant to the crisis Volkswagen now finds itself in.

And, what’s more, the feature lists all of the senior Volkswagen people involved in the engine’s development.

It starts with Volkswagen’s Executive Director of Powertrain Development, Jens Hadler. Hadler left Volkswagen abruptly in 2011, at the age of just 45. The rest of the senior development personnel listed included:

At least some of the answers Volkswagen has spent, publicly, a week looking for could be expected to come from within this group.

Dieselgate related reading:

Müller locked in as Volkswagen CEO

Euro governments probe VW

More VW engines implicated

Knives come out at Volkswagen

BMW forced to deny emissions rigging

Euro VWs ‘are affected’

VW exec bloodbath continues

Volkswagen boss quits

Volkswagen boss Winterkorn to go as crisis spreads

Dieselgate worsens, 11m vehicles could be affected

Dieselgate could cost VW CEO his job

US EPA issues Volkswagen with a warning