Porsche, Audi, Volkswagen shelve US diesels

Volkswagen's hopes of pinning Dieselgate's blame on a handful of rogue engineers have been dealt a critical blow, with Porsche, Audi and Volkswagen itself forced to halt V6 and four-cylinder diesel sales in the US.

The single scandal surrounding the EA189 four-cylinder diesel engines is turning into a fully-fledged mushroom cloud, swallowing up first the V6 diesels used across its premium brands and now some petrol engines as well.

The US Environmental Protection Agency (EPA), the California Air Review Board (CARB) and Germany's Transport Department each plan to retest all Volkswagen Group models following the company's revelation that it systematically understated its CO2 emissions figures.

Volkswagen itself, using its best spin, suggested there had been "irregularities" with under quoting CO2 figures affecting up to 800,000 cars, some of which overlap with the 11 million cars caught up in the Dieselgate scandal.

The admission means Volkswagen's petrol engines are now under scrutiny, not just its diesels, with sources insisting the affected engines are mostly three- and four-cylinder, 1.2- and 1.4-litre diesel engines diesels but also the 1.4-litre petrol-powered four-cylinder engine with Cylinder-on-Demand (COD) technology.

COD is promoted as identifying when the car needs less torque and power in light-throttle conditions (such as highway cruising or steady descents) and switching off two cylinders.

"From the very start I have pushed hard for the relentless and comprehensive clarification of events," Volkswagen Group CEO Matthias Müller said.

"We will stop at nothing and nobody. This is a painful process, but it is our only alternative. For us, the only thing that counts is the truth. That is the basis for the fundamental realignment that Volkswagen needs.

"The Board of Management of Volkswagen AG deeply regrets this situation and wishes to underscore its determination to systematically continue along the present path of clarification and transparency."

German magazine Wirschaftswoche claimed the CO2 revelations only came to light when a whistleblower contacted Müller directly, in response to an internal amnesty offered to relatively junior personnel who came forward with knowledge of any wrongdoing.

It claimed the whistleblower passed the CEO personal knowledge of how the New European Driving Cycle (NEDC) tests for CO2 and fuel consumption were being manipulated.

"Under the ongoing review of all processes and workflows in connection with diesel engines it was established that the CO2 levels and thus the fuel consumption figures for some models were set too low during the CO2 certification process," Volkswagen said in a statement.

Volkswagen has already begun negotiating with various national Government agencies to determine compensation for green tax incentives it and its customers have received, but it expects the cost to be around €2 billion, on top of the €7 billion it has set aside to clean up its Dieselgate disaster.

The "irritated" German Transport Minister, Alexander Dobrindt, yesterday confirmed he had ordered all current Seat, Skoda, Audi and Volkswagen models to be retested independently for CO2 and NOx emissions.

"We all have an interest that everything at Volkswagen is turned over and reviewed," Dobrindt said.

"It [Volkswagen] has caused irritation in my ministry and with me."

The CO2 revelations came just a day after the EPA claimed tests at three different labs showed the V6 TDI in the Cayenne, most large Audis and the Volkswagen Touareg emitted up to nine times the NOx limit.

The EPA insisted there was a complex cheat that turned on full emissions controls but switched off just one second after the scheduled termination of the US Government emission test.

Volkswagen has chosen to take on the EPA head-on, using a cunningly worded statement to proclaim its innocence without clarifying that it didn't have any kind of cheating system.

"The United States Environmental Protection Agency [EPA] informed Volkswagen Aktiengesellschaft on Monday that vehicles with V6 TDI engines had a software function which had not been adequately described in the application process," the Volkswagen statement read.

"Volkswagen AG wishes to emphasise that no software has been installed in the power units to alter emissions characteristics in a forbidden manner. Volkswagen will cooperate fully with the EPA to clarify this matter in its entirety."

It's a statement carefully crafted by lawyers and public relations experts, at once offering its cooperation, while implying that any trick software is within the EPA's legal boundaries but was perhaps not properly declared. Sources at Volkswagen said the company may be trying to walk a fine line by suggesting the software described by the EPA as a "defeat" device is actually for the engine's protection during start-up phases.

"The software does not alter emissions levels, but it ensures after a cold start that the catalytic converters quickly reach their working temperature and emissions cleaning takes effect," a Volkswagen spokesman said.

But CARB chair Mary Nichols told Reuters the lab tests had repeatedly shown low levels of NOx emissions during the test followed by far higher levels seconds later.

"It's almost impossible to explain something like that in any way other than something about the software that controls the operation," Ms Nichols insisted to Reuters yesterday.

"In all honesty that explanation doesn't make any sense," she said.

While Volkswagen is getting used to the attention, with sources confirming the original intention was to isolate Dieselgate to the main brand, Porsche and Audi are struggling to find credible arguments to explain how they didn't know about the V6 issues.

It's especially galling for ex-Porsche CEO Müller, who was parachuted into the top job at the Volkswagen Group as a cleanskin, but now has a tainted Cayenne on his resume.

Speaking at a future powertrain conference in Spain yesterday, Audi's Head of Powertrain Development, Thomas Heiduk, would only say that he had not received instructions authorising him to comment on the latest scandals. He did, though, admit he was not unhappy to be in Spain rather than at Audi's head office at Ingolstadt or at the Volkswagen Group HQ in Wolfsburg. But nothing more.

The V6 part of the Dieselgate scandal will surely spread to Europe and other markets like Australia. While Volkswagen was yesterday refusing to say how many cars were involved, it admitted to 10,000 in the US, though this figure may rise.

Volkswagen has admitted the same software is fitted to the V6 turbo-diesels in Europe and the rest of the world, though it would not estimate a figure for the cars involved. They include Porsche's Cayenne, Audi's Q5, A4, A6, A7 and A8 and Volkswagen's Touareg.

If that wasn't bad enough, the Volkswagen Group has 30 days to explain to the Indian Government why about 314,000 cars, including the Volkswagen Polo, Jetta and Vento and the Audi A4, show a wide differential in laboratory and on-road tests.

The scandal-plagued German car maker posted a €3.48 billion loss in the third quarter of 2015, its first quarterly loss in 15 years, as it begins to count the cost of its Dieselgate emissions-cheating scandal.

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