VW plans major recall over diesel-gate

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The group has announced plans to recall more than 10 million vehicles across five different brands. In another effort to contain the damage of its emissions scandal, Volkswagen has agreed to reimburse Spain’s government.

Beleaguered German carmaker Volkswagen on Tuesday announced plans to refit up to 11 million vehicles. The move comes as the Group tries to contain the damage caused by revelations that it had been cheating on US diesel emissions tests for years.

According to a press release published on the company website, affected owners would be informed “in the near future” about the need to have their tampered cars repaired.

What that fix will ultimately look like, and how it might affect vehicles’ fuel and emissions efficiency, remains to be seen. The automaker said it would “present the technical solution and measures to the responsible authorities in October,” and that customers would be “kept informed over the coming weeks and months.”

“All of the Group brands affected will set up national websites to update customers on developments,” it added.

Until then, the statement stressed “all vehicles are technically safe and roadworthy.”

Astronomical costs

The costs of the recall is likely to run into the billions, with some analysts estimating it could set the car giant back by more than $6.5 billion (5.78 billion euros).

In Germany alone, as many as 2.8 million vehicles could be affected. Here, the sense of betrayal is personal to many. Before the scandal, the iconic brand had come to represent a nation that had left behind its dark past, fuelled by some of the few national values anyone in the post-war era would dare boast about in public: accuracy, precision and undisputed quality.

Global outrage

But the outrage extends far beyond that country’s borders. In the US, where Volkswagen was caught cheating, a total of 488,123 TDI diesel cars are known to have been equipped with the manipulated Type EA189 engine. Already, angry owners are lining up to join class-action lawsuits, which could leave the company bleeding.

In Spain, the industry ministry on Tuesday announced that Volkswagen’s local chapter had agreed to reimburse fuel-efficiency subsidies. As part of a national effort to promote eco-friendly vehicles, the government in Madrid had offered a 1,000-euro discount to Spanish car buyers opting for more fuel-efficient models. Following this month’s revelations, the ministry insisted that the carmaker, and not consumers, pay the bill for breaking the rules.

Several brands affected

This came as Seat, the Spanish carmaker owned by the Volkswagen Group, admitted to having fitted 700,000 of its cars with the surreptitious software.

“These 700,000 vehicles were distributed by Seat’s global network and we are currently working to determine how many of them were sold in each national market,” a spokesman said on Tuesday. He added that the manufacturer had temporarily suspended the sale and delivery of all new vehicles with the EA 189 motors.

VW’s Czech subsidiary Skoda could be facing even bigger problems: 1.2 million of its vehicles are said to be affected.

But, for now, the biggest culprits remain the Germany-based bestsellers, Audi and VW. Audi said 2.1 million of its diesel cars worldwide were affected, while VW said an internal evaluation on Friday had established that “some five million vehicles from the Volkswagen Passenger Cars brand” had been tinkered with.

Another 1.8 million of Volkswagen’s light utility vehicles were also affected, according to a spokesman for that division.

Historic recall?

All in all, the recall could end up becoming one of the biggest ever by a single automaker. Between 2009 and 2010, VW’s arch-rival Toyota was forced to recall more than 10 million vehicles over acceleration problems. The two companies would only be dwarfed by Japanese automotive firm Takata, whose faulty airbags have so far led to recalls of more than 19 million vehicles in the US, affecting 11 different carmakers.

For Volkswagen, the crisis poses the biggest threat to the company in its 78-year history. In the 11 days since the scandal broke, the 12-brand Group’s market value has dropped by more than a third. Experts fear the aftershock could even leave a sizable dent in the German economy, which, in turn, could impair that of the rest of Europe. The country is the continent’s biggest economic engine.

“We are facing a long trudge and a lot of hard work,” Müller told a closed-door gathering of about 1,000 top managers at Volkswagen’s Wolfsburg headquarters late on Monday.

“We will only be able to make progress in steps and there will be setbacks,” he said, according to a text seen by Reuters news agency.

 

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