Volkswagen engulfed by diesel emissions scandal

Tuesday, September 22, 2015

Chief Executive of Volkswagen Martin Winterkorn issued on Sunday a public apology and announced an outside inquiry would be carried out, after the company became engulfed in a scandal about diesel emissions tests.

Over the weekend there were damaging revelations that the car manufacturer has been using illegal software to enable diesel cars to cheat on mandatory emissions tests.

An investigation into alleged breaches of environmental law was originally initiated on the advice of the International Council on Clean Transportation, a European NGO. The United States Environmental Protection Agency requested tests be carried out by West Virginia University, where the secret software was discovered.

Volkswagen has suffered a significant drop of almost a fifth in the value of its shares. There have been knock-on effects for other car manufacturers who have also seen their share values fall after suggestions that the scandal could extend much further than just Volkswagen.

The company will have to foot the bill for the recall of close to 500,000 VW and Audi cars. There is also the possibility of paying federal fines of up to US$18 billion dollars because the US Clean Air Act sets a maximum fine of US$37,500 for each vehicle that contravenes the requirements of the Act.

The software, known as a “defeat device”, enabled cars to identify when they were being tested and to switch on the emission control system. The devices may have been adding urea to the car exhaust because that would reduce the amount of nitrogen dioxide. The car would release a fraction of the nitrogen oxide compared to when they were being driven normally. Emissions of nitrogen oxide contribute to smog and are thought to have caused a rise in respiratory illnesses like asthma.