Dieselgate: VW cuts investment
Recall costs up, vehicle power and credit rating down as Volkswagen plots a way out of Dieselgate messVolkswagen has promised to cut €1 billion of planned investments a year, move all future diesel models across to urea injection, focus on electrified powertrains and streamline its operations as it tries to fight back from its Dieselgate scandal.
The moves come as VW faces a recall of 11 million cars it doesn’t yet know how to fix, potentially billions of dollars in regulator fines and a crisis of confidence among its diesel owners,
The statement from Volkswagen brand CEO Herbert Diess yesterday (Tuesday) has been one of the few concrete pieces of information coming from the crisis-hit car-maker since it admitted to using a banned software fiddle to cheat on the US emissions laws with its four-cylinder diesel models.
While Diess refused to go into details on what would be cut and from which brands, he did say that its maligned four-cylinder diesels would move to an expensive combination of Selective Catalytic Reduction (SCR) and AdBlue technology to clean up NOx emissions “as soon as possible”.
The EA 189-series engines at the core of the Dieselgate scandal used far cheaper NOx traps and the hidden software trickery, and only met the emissions standards when they were tested in a laboratory.
While Diess confirmed that the new emissions clean-up technology would be fitted only to North American and European Volkswagen engines, sources at Volkswagen suggested it would also apply to other developed markets like South Africa and Australia, where a recall of almost 100,000 has been announced.
AdBlue is the technology Volkswagen rejected early in the development of the EA189 Dieselgate engines on the grounds of cost, with insiders suggesting the after-treatment system would have added around $US400 to the cost of each car.
While Volkswagen has yet to confirm exactly how it will repair all 11 million of the Audis, Volkswagens, Seats and Skodas it will recall next year, its US boss Michael Horn has warned owners to expect some loss of performance.
Insisting the use of the 'defeat' software code was “not a corporate decision” but the work of “a couple of software engineers”, Horn yesterday said Volkswagen was working out a way to compensate owners for the “slight reduction in performance”.
It is believed US owners will receive something in the order of $US2000 as an incentive to stay within the brand.
In questioning before a US House Committee, Horn said the cars might lose “one or two miles per hour” in top speed and would return to the official mpg ratings, but said nothing of acceleration or throttle response.
Diess also flagged that Volkswagen would invest heavily to move quickly towards plug-in hybrid and battery-electric cars, even as it planned to cut €3 billion in supplier payments to help it through the Dieselgate crisis, which one investment bank estimated may cost it up to €70 billion worldwide in fines, recall costs and class-action lawsuits.
“The Volkswagen brand is repositioning itself for the future,” Diess said.
“We are becoming more efficient, we are giving our product range and our core technologies a new focus, and we are creating room for forward-looking technologies by speeding up the efficiency program,” he said.
“We are very aware that we can only implement these innovations for the future of the Volkswagen brand effectively if we succeed with our efficiency program and in giving our product range a new focus.
“Together with my Board of Management colleagues and the entire team we are working at top speed on these issues.
“Time and again, the Volkswagen team has proved it stands united and is fully focused on shaping the future, particularly when times are tough. We have now laid the further foundations for that.”
Volkswagen has already flagged cutting sponsorship across the board (its home town soccer team, Wolfsburg, has already signed a deal with Nike to replace Volkswagen next year) and is eyeing off other units, like motorsport and Bugatti.
Dieselgate related reading:
Aussie Volkswagens and Audis recalled
Dieselgate won't tarnish other German brands
Huge recall planned, other brands hit
Audis affected top two million
ACCC issues statement on VW emissions saga
Müller locked in as Volkswagen CEO
BMW forced to deny emissions rigging
Volkswagen boss Winterkorn to go as crisis spreads
Dieselgate worsens, 11m vehicles could be affected
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