Volkswagen emissions scandal expands to 11 million vehicles

  • By Charles Fleming And Samantha Masunaga Los Angeles Times
  • Tuesday, September 22, 2015 1:40pm
  • Business

The expanding Volkswagen diesel emissions scandal now includes 11 million vehicles worldwide, and threatens to destroy the credibility and market value of a global behemoth that was already showing signs of instability.

The world’s largest automobile manufacturer, Volkswagen Group was experiencing weakening sales in the U.S. and China, its two most promising areas of growth. As of the Friday before the emissions story broke, the company’s stock had already fallen to $162 a share, from a March 2015 high of $255. Midday Tuesday, the stock traded at $106.

Volkswagen has confirmed Environmental Protection Agency charges that it installed software “defeat devices” in versions of its 2009-2015 Jetta, Beetle, Golf, Passat and Audi A3 passenger cars fitted with 2.0-liter, 4-cylinder engines.

The company on Tuesday said the same software was present in as many as 11 million vehicles sold worldwide. While insisting the emissions-evading technology “does not affect handling, consumption or emissions,” the company said in a statement it was working “at full speed” to come into regulatory compliance.

Facing up to as much as $18 billion in U.S. fines alone – and liable for fines and punishments in other countries – Volkswagen said it would also set aside $7.2 billion to cover the cost of recalls and “other efforts to win back the trust of our customers.”

That broken trust may prove equally problematic for Volkswagen’s bottom line. Many buyers feel duped into having bought a polluting car with a green marketing campaign for the “clean diesels.”

In California, which has the nation’s toughest emissions standards, outraged consumers used social media to air their anger at the company. Many said they were angry enough at the company to turn away from the brand permanently.

Owner Bob Merlis, an independent music industry publicist, said he was looking to add a second Volkswagen diesel last week.

“I went shopping for a new one, the Golf Sportwagen, but that’s so off the table now,” Merlis said. “I don’t want to do business with those criminals.”

In Germany, the company’s chief executive Michael Winterkorn said he would not answer calls for his resignation. But at a New York promotional event Monday night, Volkswagen’s U.S. leader Michael Horn addressed the scandal head-on.

“We have totally screwed up,” he told attendees at a Brooklyn gathering to launch the new Passat. “Our company was dishonest with the EPA, and the California Air Resources Board and with all of you.”

Horn said “this kind of behavior” was inconsistent with the company’s core values and that the automaker needed to fix the cars to prevent this from ever happening again.

“We have to make things right with the government, the public, our customers, our employees and also very important, our dealers,” Horn said.

The automaker has suspended sales of thousands of new and used diesel vehicles on dealer lots. The affected diesel models are Jetta (model years 2009-15), Beetle (2009-15), Audi A3 (2009-15), Golf (2009-15) and Passat (2012-15).

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