On Wednesday, America’s Federal Trade Commission announced a settlement with Volkswagen to fully compensate US owners including former owners of Audi, Porsche and VW cars with 3.0-litre TDI diesel engines for “the largest false advertising case in FTC history”.
Those 80,000 cars are the Audi Q7, A6, A7, A8, A8L Q5, Porsche Cayenne diesel and VW Touareg.
This week’s settlement follows VW’s October agreement to provide up to $13 billion to owners and lessees of VW and Audi 2.0 litre diesel cars that the FTC says VW and Audi “claimed had low levels of harmful emissions, but did not. Nearly 500,000 cars are affected”.
US owners of 2009-2012 cars will be able to sell their car back to Volkswagen for between $34,000 to $76,000. Owners of newer cars will get an emissions repair and between $11,500 to $24,600. “This means consumers with newer vehicles will receive the car they thought they purchased — plus a substantial additional payment.”
The FTC order will give VW, Audi and Porsche owners more than a billion dollars. But if VW can’t fix the emissions without degrading the cars’ performance then Volkswagen may have to pay as much $5.6bn. So, as of today, the US has made VW commit to $32bn and charged seven current and former VW executives with wrongdoing.
So, let’s be very clear about this.
While VW have agreed to do the right thing by US owners, every VW, Audi and Porsche owner in other lands may only get a fix. That’s despite the company making 11 million diesel cars sold worldwide that detected emissions tests and artificially reduced the amount of nitrogen oxide pumped out. Now I know a bit more than most about the PR caper but even I find it breathtaking that on the company’s website it says: “Software installed in the engine control units of some Volkswagen vehicles fitted with an EA189 diesel engine permitted different nitrogen oxide emissions (NOx) depending on whether the vehicle was operating under a laboratory test cycle or operating outside of the test cycle.” In other words, there’s not really a problem it is only in artificial conditions that there’s an issue.
In Australia, local VW boss Michael Bartsch, followed the same line saying: “The relevant facts and complex legal issues that have played a role in coming to these agreements in the United States are materially different from those in Europe and Australia.” And for good measure he also pointed out that more than 8.5 million customers in Europe were not eligible for compensation, either. Well that makes it OK then.
So, it sounds like there was only a bit of bad gas coming out the back of the car. No. The independent study by the West Virginia University Centre for Alternative Fuels Engines and Emissions showed that VW vehicles tested emitted nitrous oxide at up to 40 times the permissible limit. Can we be very clear here again? 40 times. Not 4 times. 40 times.
It’s all neatly summed up in court documents filed in an action brought by some US dealers that say Volkswagen’s apparent success in creating the niche CleanDiesel market and exploiting it led to a brand resurgence that significantly enhanced the value of the brand and, therefore, the value of — and cost to purchase and maintain — franchise dealerships. Now however, “there are half a million cars running an emissions set up that never should’ve left the factory.” Each of these Affected Vehicles is illegal and never should have been sold because Volkswagen’s fraudulently obtained EPA certificates of conformity were invalid.”
Let’s look at the affidavit filed by FBI special agent Ian Dinsmore when he went off to arrest Oliver Schmidt in early January this month for “defrauding the US, VW customers and violating the Clean Air Act”. Ollie was the general manager of VW’s Environmental and Engineering Office in Auburn Hills, Michigan
“VW represented to the public including its US customers, the US regulators, dealers, investors, the media and others that the vehicles approved by the EPA and CARB (the Californian regulator) were clean diesel that emitted fuel pollutants including nitrous oxide in accordance with the new and stricter US emission standards.”
According to whistleblowers in the affidavit and court filings, when VW employees realised that they couldn’t design a diesel engine to both meet the strict nitrous oxide emission standards and go quick, supplier Bosch and VW designed a software function to cheat the US pollution tests that was installed in the first car to roll off the lines in 2009 and continued to 2016. When Oliver Schmidt learnt about the West Virginia University test, he sent an email saying, “it must first be decided whether we are honest. If we are not honest, everything stays as it is,” according to the affidavit. The FBI alleges “VW employees then pursued a strategy of concealing the defeat device in responding to questions from US regulators, while appearing to co-operate”.
In March 2015, Schmidt was promoted to principal deputy to the head of engine development in Wolfsburg. On January 9, this year, the FBI arrested him. In response, Volkswagen CEO Matthias Mueller said: “Volkswagen deeply regrets the behaviour that gave rise to the diesel crisis. We will continue to press forward with changes to our way of thinking and working.”
Despite all the scandal, the ongoing investigations, the actions from customers around the world, VW, Audi, Porsche and other VW brands are soaring. There’s an old saying in Australian politics: “What do you do when the electorate feels betrayed? Betray them again.”