Volkswagen’s diesel debacle is going global. As expected yesterday, the defeat device is a worldwide problem, and not just the work of a rogue U.S. engineer. Volkswagen confirmed today that the software is in most of Volkswagen’s diesel engines, but that it usually is dormant. In 11 million cars with the EA 189 engine, the defeat device is very active.
“Discrepancies relate to vehicles with Type EA 189 engines, involving some eleven million vehicles worldwide,” Volkswagen said in an emailed statement today. “A noticeable deviation between bench test results and actual road use was established solely for this type of engine.”
Volkswagen wants to “eliminate these deviations through technical measures,” VW-speak for: 11 million cars will have to be recalled, and re-fitted. This will not be just a flash job. Volkswagen today set aside a charge of some $7.25 billion, which will hit the P&L of the 3rd quarter, and which most likely will result in a loss.
On hearing this, the Volkswagen share continued its nearly vertical drop this morning. In early trading, the Volkswagen share was down another 20 percent on Tuesday, touching 100 Euro after selling for 170 Euro the week before. VW Supervisory Board member Olaf Lies: “I am sure that there will be personnel consequences in the end.” The scandal could cost Winterkorn his job. On Friday, Volkswagen’s Supervisory Board will convene. It is supposed to approve two more years for Winterkorn. Under the circumstances, such a decision may be a bit hard. Germany’s Tagesspiegel already says that Winterkorn may get axed on Friday, and replaced with Porsche chief Matthias Müller. Müller was Piech’s choice for the top job before Piech lost the boardroom brawl last April.
Even before Volkswagen admitted that the cheater engines are everywhere, the scandal spread around the globe. This is the situation this morning:
France: Finance Minister Michel Sapin demands a “broad European Union-level inquiry.”
Switzerland: Swiss Federal Roads Office investigates whether the same type of Volkswagen diesel cars that were sold in the United States were also sold in Switzerland.
U.S.A.: First class action suit filed. DOJ started criminal probe. Congressional hearing planned. EPA and CARB will test diesel vehicles from other manufacturers for similar violations. ClaSS ACTION SUITS FILED.
UK: “Millions of British motorists could be driving illegal cars which have been doctored to mask dangerous levels of emissions after Volkswagen admitted to rigging pollution tests.” (Telegraph.) UK DOT warns that cars would be immediately recalled and banned from sale if they were found to have breached European regulations.
South Korea: Government will investigate three of Volkswagen Group’s diesel models. “If South Korean authorities find problems in the VW diesel cars, the probe could be expanded to all German diesel cars,” an Environment Ministry spokesman told Reuters.
Australia: Government contacted Volkswagen, ” seeking urgent clarification from Volkswagen Group Australia, as to whether vehicles supplied to the Australian market use similar software to that used in the U.S,” the DOI told Reuters.
P.S. In a very apropos Freudian slip, Reuters writes that “German auto supplier Bosch said on Tuesday it had delivered components, so-called common jail injection systems,” to Volkswagen.