This year has to go down in automotive history as being one of the darkest times in the history of the diesel cars, thanks to Volkswagen Group‘s emission level forgery involving several million cars. Folks ended up calling the affair as “DieselGate”, after the infamous and hackneyed “gate” cliché. True to the spotlight thrown by media, the scandal is emerging as the biggest scandal ever in the auto industry. Its dirty tentacles are growing long, entrapping many other car models across VW’s sister-brands and markets outside USA, with fresh revelations emerging up every day, thereby broadening its scope.
Soon after the USA’s EPA (Environmental Protection Agency) caught VW cheating emission standards with defeat devices, several developments took place. To begin with, the Volkswagen Commercial Vehicles were also implicated in the deception crisis. Things took a worse turn ever later when EPA found similar defeat devices in larger 3.0-litre diesel engines used in premium Volkswagen, Audi, and Porsche models, notably, 2014 Touareg, 2015 Porsche Cayenne, and 2016 A6 Quattro, A7 Quattro, A8, A8L, and Q5. The 3.0-litre diesel engine was developed by Audi, unlike the engines made by VW implicated in the deception earlier. Further, large SUVs with higher engine capacity and emissions are increasingly suspected in a scam that started with family sedans. Although VW group is still denying the allegation, EPA’s plan to test all light-duty diesel vehicles on sale in US will bring more clarity on the list of emission deceiving cars.
Adding to owes, fresh reports on inconsistent Co2 emission levels proved that VW’s road of deceit is unending. Early this month, Volkswagen admitted that about 800,000 cars emit more carbon dioxide than levels reported to regulators of different markets, as revealed by the company’s internal investigation. VW was vague in its statement, saying a “majority” of the affected cars were diesels, but without specifying which ones. Nor it is clear whether the models it refer to are the ones already affected by the diesel scandal using a defeat device. Out of the 8 million odd cars, about 430,000 were new 2016 models across the group’s subsidiary brands such as Volkswagen, Audi, Skoda and Seat. It is also possible that older models be added to the list in the days to come with comprehensive investigations on cars that flout permissible Co2 limits.
Although the automaker hasn’t come up with the official figures of cost to company out of the scandal and the latest emission irregularities, a Barclays analyst expects the cost to be more than $26 billion by 2017 (as quoted by Bloomberg). This includes around 2 billion USD to fix the
affected cars and 2.1 billion USD more on penalties, in addition to already pegged 18 billion USD. It is also believed that VW group has enough financial strength to pay for the extensive damage caused by the crisis. The automaker is already in talks with banks to raise more than 21 billion USD in “bridge financing” to deal with the financial liabilities.
Volkswagen, last week, halted the production of 2016 Passat Diesel in United States. Porsche and Audi has stopped selling select diesel models including that of the Cayenne and Q7. VW has already initiated several efforts to salvage its customer’s trust by its ‘Goodwill Package’. This includes open apologies and several incentives to owners of the affected cars, better valuation for their cars at the company’s used car mart.
Repercussions in India
Automotive Research Association of India (ARAI), India’s premier automobile research association, took suo motu on the emission scandal and initiated a probe on cars sold by the VW group. As per the on-going probe, ARAI has found models like VW Polo, Vento, Jetta and the Audi A4 (all Indian-spec) register variations of 5-6 times more Co2 emissions in on-road conditions as against the previously lab-tested levels. VW India has been issued a notice from ARAI seeking explanation on the issue by the end of this month.
This may seriously affect VW’s plans to launch a series of new cars in India in next two years, including the Beetle, Passat, Tiguan SUV and a compact sedan based on the Polo platform. If the emission issue remain unaddressed for some time or more models found guilty in flouting Co2 norms, then the company will be forced to halt their diesel models and launch only the petrol variants of the new cars until the issue has been resolved.
In general, Indian consumers aren’t highly environmentally conscious. It is unlikely that any emission fraud make big impacts in the market, as long as Volkswagen’s fix of affected cars doesn’t make huge drop in their fuel efficiency. However, VW’s image as a ‘qualified’ automaker on the lines of ‘German Reliability’ may receive huge blows. Perhaps, the company may start with a new advertisement campaign of promise and honesty just like they did in 2010 to break the ice in the Indian market.
The diesel scam is becoming dirtier day-by-day. The ‘diesel gate’ is opening wider in its scope and complexity of problems with every fresh revelations. Nevertheless, the issue is making deep impacts on the way emission norms are perceived and implemented, pushing policy makers and industry think tanks to evolve a more rigorous and effective emission regime.
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