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Emissions scandal: Has VW been cheating since 2005?

2015-12-11 08:46

CAN MUELLER TURN VW AROUND? New VW Group CEO Matthias Mueller said the root of the emissions-cheating scandal dated to 2005.Image: AFP / John Doughall

Wolfsburg, Germany - Volkswagen said Thursday the roots of the global pollution-cheating scandal it is currently engulfed in date back to 2005, and while the current situation was difficult, it would not break the company.

In a news conference detailing the latest developments in the investigation into the affair, VW supervisory board chief Hans Dieter Poetsch and chief executive Matthias Mueller said evidence suggested the scam was the work of just a small group of engineers.

Poetsch said there was "no evidence to suggest that supervisory board members or management board members are implicated."

Defeat device

VW was plunged into its deepest-ever scandal in September, when it was forced to admit it had installed emission-cheating software into 11-million diesel engines worldwide.

The revelations sent shockwaves through the auto sector around the world and some observers suggested there could even be fallout for the wider German economy.

Read: Emissions scandal: How VW's 'defeat device' works

VW, once seen as the paragon of German industry, is facing still incalculable costs, not only to its reputation and global sales and profits, but also potential billions in possible fines and legal costs.

Earnings target unchanged

CEO Mueller, brought in to resolve the crisis, said VW was "currently doing everything it can to limit the effect the current situation has on its business performance."

The group's operating business "is meeting expectations, and the 2015 annual forecast, which was updated at the end of October, remains unchanged," the 62-year-old executive said.

Mueller said: "The sales figures are very mixed with regards to the various markets and brands. Overall, the situation is not dramatic, but, as was to be expected, it's tense.

Read: Emissions scandal: VW say probe 'smaller' than suspected

"Although the current situation is serious, this company will not be broken by it," he insisted.

It was effectively Mueller's first news conference in person as CEO, aside from a telephone conference at the end of October, where he revealed that VW had run up its first quarterly loss in 15 years as a result of the billions of euros it set aside to cover the costs of the scandal.

Chain of errors

Supervisory board chief Poetsch said the scam was "not attributable to a one-off error, but an unbroken chain of errors," dating back to 2005, when VW launched a massive new campaign to sell diesel engine vehicles in the United States.

VW, which had looked set to overtake Toyota in 2015 as the world's biggest carmaker in terms of sales, confessed to systematically fitting so-called defeat devices into its diesel cars in order to meet the rigorous emission standards in the US.

Defeat devices are sophisticated software designed to turn on pollution controls when the car is undergoing testing, and off when it is back on the road, allowing it to spew out harmful levels of nitrogen oxide.

US authorities had been alerted to VW's cheating practices by a non-profit group called the International Council on Clean Transportation.

A slew of different investigations, both criminal and regulatory, followed in a number of different countries, all of which are still ongoing.

VW, too, launched internal and external inquiries of its own.

Too early to name culprits

Mueller and Poetsch said it was still too soon to pinpoint exactly who were the masterminds behind the scam.

But VW has said that around 50 employees have come forward so far to testify. The carmaker employs a global workforce of around 600 000.

Eight employees have been suspended. The head of development at VW's luxury brand Audi, Ulrich Hackenberg, had been rumoured to be among those responsible. His departure was announced by the carmaker last week, but VW did not provide any reason.

The auto giant has drawn up the battle plans for a massive recall operation for the millions of cars affected, with the necessary remedial action ranging from a simple software update in some cases to the insertion of new hardware in others.

Off the hook on CO2

VW was nevertheless afforded some welcome respite from its woes this week, when it said that allegations it had lied about the carbon emissions of some of its cars had proven to be unfounded.

In addition to the manipulated engine software, VW admitted in November that "inconsistencies" had been uncovered on its cars' carbon emissions.

Read: Emissions scandal: VW off the hook on CO2 emissions?

Carbon dioxide or CO2 is a greenhouse gas which traps heat from the sun and is blamed for man-made climate change. And tackling CO2 is becoming a rising priority in many countries, especially in Europe, where cars are often taxed according to their carbon emissions.

But "extensive" investigations had shown that the carbon emission values were largely correct and that there would no consequences for customers, VW said.


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