Volkswagen reassures dealers: There will be 2016 diesels

Oct. 8, 2015 12:05 PM PT

Volkswagen, having withdrawn its application to sell diesel vehicles in the U.S. for the 2016 model year, is telling dealers that it hopes to put diesels back on showroom floors.

The embattled German carmaker, trapped in an expanding scandal over its intentional cheating of Environmental Protection Agency emission standards with a so-called defeat device, has at least temporarily abandoned plans to include diesel models in its 2016 lineup.

But the company has offered financial support to U.S. dealers, some of whom rely on diesel car sales for up to 25% of their Volkswagen volumes.

Volkswagen’s U.S. chief executive, Michael Horn, spent much of Thursday morning testifying before Congress about his company having admitted cheating on diesel emissions testing.

He told lawmakers that “defeat devices” installed in 11 million Volkswagen and Audi engines were the work of a handful of rogue software engineers, and told outraged lawmakers that it would take years to fix all of the nearly 500,000 vehicles affected in the U.S.

“This was a couple of software engineers who put this in for whatever reason,” Horn told a House subcommittee hearing. “To my understanding this was not a corporate decision. This was something individuals did.”

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In the testimony, in which Horn offers “a sincere apology for Volkswagen’s use of a program that served to defeat” emissions tests, the executive said, “We have withdrawn the application for certification of our model year 2016 vehicles.”

Horn said his company was in discussions with the EPA and the California Air Resources Board -- which oversees the nation’s toughest clean air rules -- to find an acceptable “emissions control strategy.”

Horn’s statements did not make it clear what sort of fix the company was proposing for the VW vehicles already on the road that currently cannot pass emissions tests.

In addressing that point, his testimony said, “We described to the EPA and CARB that our emissions control strategy also included a software feature that should be disclosed to and approved by them as an auxiliary emissions control device (‘AECD’) in connection with the certification process.”

Kelley Blue Book analyst Karl Brauer said that wouldn’t reassure current owners waiting to know what can be done to make their vehicles compliant -- a simple software update or the retrofitting of more complicated hardware.

“They’ve abandoned the entire 2016 model year diesels, and that’s not good news for owners,” Brauer said. “It suggests that the fix is probably not going to be easy. It suggests that the fix involves so much challenge that they’re not even going try to make the 2016s work.”

Volkswagen spokesmen did not immediately respond to requests for explanation. A representative for the EPA, confirming VW’s actions, had no comment.

The EPA issued a statement saying, “Today Volkswagen withdrew their certification application for 2016 vehicle models that use the 2.0L diesel engine including the AUDI: A3 VOLKSWAGEN: BEETLE, BEETLE CONVERTIBLE, GOLF, GOLF SPORTWAGEN, JETTA, PASSAT models.”

A Volkswagen representative said the Touareg diesel, which uses a 3.0-liter engine, was not affected by the EPA discussions and would be part of the 2016 line-up.

But Horn, taking “complete responsibility” for the scandal, said, “these events are deeply troubling. I did not think that something like this was possible at the Volkswagen Group. We have broken the trust of our customers, dealerships and employees, as well as the public and regulators.”

Volkswagen has admitted installing cheating software in 11 million diesel vehicles worldwide, among them some model year 2009 to 2015 Beetles, Golfs, Jettas, Passats and some Audi A3s. An estimated 482,000 of those vehicles were sold and registered in the U.S., about 15% of them in California.

Twitter: @misterfleming

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