What is Volkswagen accused of?

It's been dubbed the "diesel dupe". In September, the Environmental Protection
Agency (EPA) found that many VW cars being sold in America had a "defeat device"
- or software - in diesel engines that could detect when they were being tested,
changing the performance accordingly to improve results. The German car giant has
since admitted cheating emissions tests in the US.

VW has had a major push to sell diesel cars in the US, backed by a huge marketing
campaign trumpeting its cars' low emissions. The EPA's findings cover 482,000 cars
in the US only, including the VW-manufactured Audi A3, and the VW models Jetta,
Beetle, Golf and Passat. But VW has admitted that about 11 million cars worldwide,
including eight million in Europe, are fitted with the so-called "defeat device".

The company has also been accused by the EPA of modifying software on the 3 litre
diesel engines fitted to some Porsche and Audi as well as VW models. VW has
denied the claims, which affect at least 10,000 vehicles.
In November, VW said it had found "irregularities" in tests to measure carbon dioxide
emissions levels that could affect about 800,000 cars in Europe - including petrol
vehicles. However, in December it said that following investigations, it had
established that this only affected about 36,000 of the cars it produces each year.

This 'defeat device' sounds like a sophisticated

piece of kit.
Full details of how it worked are sketchy, although the EPA has said that the engines
had computer software that could sense test scenarios by monitoring speed, engine
operation, air pressure and even the position of the steering wheel.

When the cars were operating under controlled laboratory conditions - which typically
involve putting them on a stationary test rig - the device appears to have put the
vehicle into a sort of safety mode in which the engine ran below normal power and
performance. Once on the road, the engines switched out of this test mode.

The result? The engines emitted nitrogen oxide pollutants up to 40 times above what
is allowed in the US.

What has been VW's response?

"We've totally screwed up," said VW America boss Michael Horn, while the group's
chief executive at the time, Martin Winterkorn, said his company had "broken the
trust of our customers and the public". Mr Winterkorn resigned as a direct result of
the scandal and was replaced by Matthias Mueller, the former boss of Porsche.

"My most urgent task is to win back trust for the Volkswagen Group - by leaving no
stone unturned," Mr Mueller said on taking up his new post.

VW has also launched an internal inquiry.

With VW recalling millions of cars worldwide from early next year, it has set aside
€6.7bn (£4.8bn) to cover costs. That resulted in the company posting its first
quarterly loss for 15 years of €2.5bn in late October.

But that's unlikely to be the end of the financial impact. The EPA has the power to
fine a company up to $37,500 for each vehicle that breaches standards - a maximum
fine of about $18bn.

The costs of possible legal action by car owners and shareholders "cannot be
estimated at the current time", VW added.
Are other carmakers implicated?
That's for the various regulatory and government inquiries to determine. California's
Air Resources Board is now looking into other manufacturers' testing results. Ford,
BMW and Renault-Nissan have said they did not use "defeat devices", while other
firms have either not commented or simply stated that they comply with the law.

The UK trade body for the car industry, the SMMT, said: "The EU operates a
fundamentally different system to the US - with all European tests performed in strict
conditions as required by EU law and witnessed by a government-appointed
independent approval agency."

But it added: "The industry acknowledges that the current test method is outdated
and is seeking agreement from the European Commission for a new emissions test
that embraces new testing technologies and is more representative of on-road
conditions."
Things are seriously bad when one of the world’s most respected business focused
publications, the Financial Times (FT), asks if the auto “industry faces ‘Libor moment’”? Yet
that was a headline yesterday in the lead article in the FT about the still expanding crisis
involving the auto manufacturer Volkswagen (VW) and its emission test cheating that has
come apart over the past few days. Last week, the US accused VW of rigging its 500,000
American diesel cars so they would pass emissions requirements when being tested yet belch
out 30%-40% more pollution when in actual operation. VW accomplished this through
software that could distinguish between testing and operation.

What do you think the chances are that VW was not aware that the ‘defeat device’ software
was in its vehicles? Anyone out there think that VW negligently installed and upgraded
software through multiple product lines for over 6 years in upwards of 11 million autos? If
you do it may be time for a very long session on the meaning of the word intentional.
However the world was stunned this week when not only VW admitted that it had installed
software to provide incorrect data on emissions tests around its diesel vehicles in the US but,
as reported in the online publication Slate, “the German car manufacturer announced that 11
million of its cars were fitted with diesel engines that had been designed to cheat emissions
standards.” Obviously the culture of the company comes into serious question when such a
worldwide, multiyear, systemic plan is designed and implemented to break the law.

As further reported in the FT in another article, entitled “VW woes cast doubt over chief’s
place in driving seat”, Chris Bryant and Andy Sharman reported that Martin Winterkorn, VW
chief executive wrote that he ordered an external investigation and quoted him for the
following, “We do not and will not tolerate violations of any kind of our internal rules or the
law.” However the article also quoted Ferdinand Dudenhoeffer, an automotive expert at the
University of Duisburg-Essen, for the obvious, “Either Winterkorn knew about [the cheating]
and should resign, or he didn’t know, and should resign anyway.”
The financial cost to VW has been dramatic and immediate. The company’s stock lost 20%
of value in one day, erasing some €13bn of VW capitalization of company capitalization.
While the company announced it had reserved some €6.5bn for repairs; the potential US fines
can range as high as $37,500 per car under the Clean Air Act which would be a total upwards
of $18bn. But in addition to the repair costs, there is the cost for diminution of value of each
car so there is already at least one class action suit on file. That does not even begin to take
into account the inevitable shareholder actions against the company management.

What about criminal sanctions as the Wall Street Journal (WSJ) reported, in an article entitled
“U.S. Begins Criminal Probe of VW” by William Boston, that a criminal probe has begun.
One might think after the recent General Motors (GM) settlement through a Deferred
Prosecution Agreement (DPA) of their liability in the ignition switch scandal in which people
actually died, VW would have little to fear for some pollution. However, hell hath no fury
like a Justice Department criticized for a too lenient settlement when a foreign manufacturer
is now in its sights. If I were a senior executive at VW right now, I would be lawyering up,
because after the GM settlement with no individual prosecutions – and most especially after
the release of the Yates Memo – the Department of Justice (DOJ) will certainly be looking to
prosecute individuals who had a hand in polluting America’s air.
Not surprisingly, most of the world’s auto manufacturers took pains to immediately distance
themselves from the actions of VW. However, I think it may be fair to suspect that the
Environmental Protection Agency (EPA) and its European Union (EU) based brethren will be
increasing their testing of all diesel autos regardless of the manufacturer because, as the FT
noted, “The sight of a US regulator alleging that VW, a European car maker, has cheated
during pollution measuring tests raises an uncomfortable question for EU authorities.”

The VW case may well bookend with the GM case about what happens when compliance and
ethics are not taken seriously within an organization. What does it tell you that a company
can have a worldwide, multiyear scheme in place to not only defraud the consuming public
but also lie to government regulators in the actual reporting? Does the Siemens Foreign
Corrupt Practices Act (FCPA) scandal ring any bells here?

Moreover, if a company had so little regard for ethical behavior that it engaged in such
conduct for over six years, do you think that attitude may bleed over into any other areas of
business? How about anti-corruption compliance? After all, VW did sell only 500,000 of
those 11 million diesel autos here in the US. Do you think the Securities and Exchange
Commission (SEC) might be interested in testing VW’s internal controls about now? Could
VW have engaged in other intentional conduct that may well have violated the FCPA?

So is the FT right, that the auto industry might face a Libor moment? Only time will tell but I
would hope that every compliance officer at every similarly situated auto company is pulling
back the sheets to look at such questions and, more importantly, that they are being supported
by senior management in their compliance inquiries. It is certainly one thing for management
to askwhat did you find when you go looking but it is another question for management to
say why are you looking? If you face such an attitude, it may well be time for you, as a Chief
Compliance Officer (CCO) or compliance practitioner, to consider moving on before any
regulators come knocking.
The VW emissions scandal will be with us all for quite sometime into the future. Where VW
comes out in this will in large part depend on the actions they take in the very near future.
One suggestion I have is that the SCCE’s annual Compliance and Ethics Institute will be held
next month from October 4-7. VW senior management might want to attend and sign up for
all the sessions which have the word ETHICS in the title.
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such legal advice or services, nor should it be used as a basis for any decision or action that
may affect your business. Before making any decision or taking any action that may affect
your business, you should consult a qualified legal advisor. The author, his affiliates, and
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author can be reached at tfox@tfoxlaw.com.
BBC Panorama has showcased how Volkswagen's 'defeat device' can cheat official
European emissions tests as part of one of its in-depth investigations.
The show, aired at 8:30pm on Monday, is believed to be the first time the cheating software
has been filmed in action, and all but confirms that the device can rig type approval testing in
Europe.
Using back-to-back tests comparing the conditions used for the official EU test with the
device active and then inactive, the nitrogen oxide (NOx) emissions increased by 160%, way
beyond the legal limit.

+3
Damning report: BBC Panorama's investigation showed exactly how the VW Group defeat device works to cheat European type
approval testing for cars sold in the UK
So far, VW Group has confirmed that 8.5 million European cars have the software fitted — 1.2 million of them
being UK vehicles.
But this is the first time the public will see exactly how the device works to restrict NOx emissions during type
approval testing.
With the help of a former government vehicle inspector, Panorama tested a VW Passat BlueMotion diesel at an
accredited testing facility in the Czech Republic — no UK labs would allow the test to be conducted, the BBC
said.

But because the Czech lab used is governed by the same rules and regulations as those in the UK, it is used
regularly to certify new cars and engines for the UK market.
The BBC prepped the car to regulation standards and ran the Euro 5 emissions test cycle — the cycle used to
clarify if cars pass examinations in order to be sold in Europe.
During the test, the Passat emitted just 167mg/km of NOx gases — below the 180mg/km limit all models need to
achieve to be able to appear in UK showrooms.
But as the Environmental Protection Agency found when it originally detected the emissions cheating software in
September, the defeat device in the car's computer understands when it is being tested under the Euro 5
conditions in a laboratory due to the strict repeatable nature of the test.
The Euro 5 routine is regimentally followed each time during type approval testing — the car starts with a cold
engine in a lab that's between 20 and 30 degrees centigrade. It's then driven for six miles on a rolling road at
almost the exact same speed with each gear change conducted at exactly the same time. Each test lasts for 20
minutes and 20 seconds.
Because the device recognises this test regime, it cuts poisonous nitrogen oxide (NOx) gas pollution from the
exhaust pipe.

+3
A VW Passat BlueMotion (like the one pictured) was tested under Euro 5 test conditions. When the defeat device didn't realise the car
was being tested, it emitted 160% more NOx gases
The BBC then tricked the car into thinking it was no longer in the lab by accelerating hard and reaching speeds
above the motorway limit.
The exact same Euro 5 emissions test was then reran, this time with the engine hot.
The result showed a 160 per cent increase in NOx emissions, reaching 435mg/km - more than twice the legal
limit in Europe.
The BBC presented its results to VW, which admitted the software device had cheated the
type approval test.
'With this software, it was possible for the vehicle to recognise laboratory test conditions and the engine control
could switch over to emitting compliant nitrogen dioxide levels during the test cycle,' a VW spokesman is quotes
as saying.
'This would have been the likely condition in your test.
'As you ran the second test (described as a hot test) immediately afterwards, the vehicle did not recognise this as
a test condition and changed its emission strategy.'
+3
Under fire: VW is facing legal action and a collapse in consumer confidence
Specialist consumer and product liability lawyers at Irwin Mitchell said they have already been contacted by more
than 1,800 people regarding the VW scandal.
They have already warned that the legal consequences could be catastrophic for VW Group and believe that that
this latest revelation could mean that millions of more cars are affected.
Dan Brumpton, a partner at the law firm, said: 'The situation potentially just got a lot worse for VW if these
findings are accepted to be correct.
'We are concerned that their customers may have been subject to a misrepresentation, as they would essentially
have been sold a vehicle on the pretence that it meets key UK and EU regulations regarding emissions when, in
fact, it did not.
'Revelations on BBC's Panorama suggests that the results from cars tested in Europe are not accurate and could
mean that more cars than originally thought could be involved.'

Read more: http://www.thisismoney.co.uk/money/cars/article-3330737/BBC-Panorama-showcases-VW-software-cheats-European-test-

conditions.html#ixzz40pVB9syq
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Volkswagen became the target of regulatory investigations in multiple countries,[19] and
Volkswagen's stock price fell in value by a third in the days immediately after the news.
Volkswagen Group CEO Martin Winterkorn resigned, and the head of brand development Heinz-
Jakob Neusser, Audi research and development head Ulrich Hackenberg, and Porsche research
and development head Wolfgang Hatz were suspended. Volkswagen announced plans to spend
US$7.3 billion on rectifying the emissions issues, and planned to refit the affected vehicles as
part of a recall campaign. The Volkswagen emissions scandal raised awareness over the
higher levels of pollution being emitted by all vehicles built by a wide range of car makers, which
under real world driving conditions are prone to exceed legal emission limits. A study conducted
by ICCT and ADAC showed biggest deviations from Volvo, Renault, Jeep, Hyundai, Citroën and
Fiat.[20][21][22] A discussion was sparked that software-controlled machinery will generally be prone
to cheating, and a way out would be to make the software source code accessible to the public.

According to the EPA, Volkswagen had insisted for a year before the outbreak of the scandal that
discrepancies were mere technical glitches.[71] Volkswagen only fully acknowledged that they had
manipulated the vehicle emission tests after being confronted with evidence regarding the
"defeat device".[72][73]

The first sign that Volkswagen was ready to come clean reportedly occurred on 21 August 2015
at a conference on green transportation in Pacific Grove, California, where an unnamed
company representative approached Christopher Grundler, director of the EPA Office of
Transportation and Air Quality, and surprised him by informally admitting that the company had
been deceiving regulators.[74] A CARB official was standing next to Grundler at the time.[74]

Formal acknowledgement of the deception was made by Volkswagen executives in Germany

and the United States to EPA and California officials during a 3 September conference call,
during which Volkswagen executives discussed written materials provided to the participants
demonstrating how Volkswagen's diesel engine software circumvented US emissions tests. That
admission came after the EPA threatened to withhold approval for the company's 2016
Volkswagen and Audi diesel models.[12]
I am shocked by the events of the past few days. I am stunned that misconduct on such a scale was possible in
the Volkswagen Group. As CEO I accept responsibility for the irregularities. I am doing this in the interests of the
company even though I am not aware of any wrongdoing on my part.

“
”
Martin Winterkorn, resignation statement, September 23, 2015.[75]

Volkswagen's CEO Martin Winterkorn said: "I personally am deeply sorry that we have broken
the trust of our customers and the public." Winterkorn was in charge at Volkswagen from the
start of 2008 to September 2015.[76]He attributed the admitted wrongdoing to "the terrible
mistakes of a few people". Winterkorn initially resisted calls to step down from his leadership role
at VW,[77][78] but then resigned as CEO on 23 September 2015.[79][80][81]
Volkswagen Group of America CEO Michael Horn was more direct, saying, "We've totally
screwed up."[77] Horn added, "Our company was dishonest with the EPA, and the California Air
Resources Board and with all of you."[78]Olaf Lies, a Volkswagen board member and economy
minister of Lower Saxony, later told the BBC that the people "who allowed this to happen, or who
made the decision to install this software" acted criminally, and must be held personally
accountable. He also said the board only found out about the problems "shortly before the media
did", and expressed concerns over "why the board wasn't informed earlier about the problems
when they were known about over a year ago in the United States".[82]

Volkswagen announced that 11 million cars were involved in the falsified emission reports, and
that over seven billion dollars would be earmarked to deal with the costs of rectifying the software
at the heart of the pollution statements.[15] The newly appointed CEO of VWMathias Müller stated
that the software was only activated in a part of those 11 million cars, which has yet to be
determined.[14] The German tabloid Bild claimed that top management had been aware of the
software's use to manipulate exhaust settings as early as 2007. Bosch provided the software for
testing purposes and warned VW that it would be illegal to use the software to avoid emissions
compliance during normal driving.[83] Der Spiegel followed Bild with an article dated 30 September
2015 to state that some groups of people were aware of this in 2005 or 2006.[84] Süddeutsche
Zeitung had similarly reported, that Heinz-Jakob Neusser, one of VW's top executives, had
ignored at least one engineer's warnings over "possibly illegal" practices in 2011.[85]

On 28 September 2015, it was reported that VW had suspended Heinz-Jakob Neusser, head of
brand development at its core VW brand; Ulrich Hackenberg, the head of research and
development at its brand Audi who oversees technical development across the VW group; and
Wolfgang Hatz, research and development chief at its sports-car brand Porsche who also heads
engine and transmissions development of the VW group.[86]

On the same day it was reported that in addition to the internal revision process to investigate the
incidents, the supervisory board of VW hired American law firm Jones Day to carry out an
independent external investigation.[87] A software audit trail is one possible way of investigating
what took place when; test logs are another way.[88]

For the European market, VW has stated unequivocally that EA288-engined cars (which conform
to Euro 6 standards) are not affected, even though MY2015 TDIs in the US (which all use the
EA288) are part of the EPA allegation and VW's admission. VW announcements to the German
press make no mention of any EA288-equipped cars being part of the scandal in any country.

Other irregularities[edit]
CO2 emissions irregularities[edit]

On 3 November 2015, VW revealed that its internal investigation found that CO2 emissions and
fuel consumption figures were also affected by "irregularities". These new issues, first estimated
to cost up to €2 billion to repair, involved mainly diesel, but also some petrol models, with initial
estimates suggesting that approximately 800,000 vehicles equipped with 1.4, 1.6 and 2.0 litre
motors from VW, Skoda, Audi and Seat might be affected.[6] On 9 December 2015, VW revised
these estimates, saying that only around 36,000 vehicles are affected by the irregularities, while
also affirming that it had found no evidence of unlawful changing of CO2 emissions data.[9] The
news prompted a 7.3 percent increase in VW preference shares on the same day.[9][89]
3.0 liter TDI emissions irregularities[edit]

On 20 November 2015, the EPA said that VW officials told the agency that all 3.0-liter TDI diesel
engines sold in the US from 2009 through 2015 were also fitted with emissions-cheating
software, in the form of "alternate exhaust control devices". These are prohibited in the United
States, however the software is legal in Europe.[90] VW acknowledges these devices' existence,
but maintains that they were not installed with a "forbidden purpose".[89] On 4 January 2016, the
US department of justice filed a complaint in a federal court against VW, allegeing that the
respective 3.0-liter diesel engines only meet the legal emission requirements in a “temperature
conditioning” mode that is automatically switched on during testing conditions, while at "all other
times, including during normal vehicle operation, the vehicles operate in a 'normal mode' that
permits NOx emissions of up to nine times the federal standard".[91] The complaint covers around
85,000 3.0 liter diesel vehicles sold in the United States since 2009, including the Volkswagen
Touareg, Porsche Cayenne, Audi A6 Quattro, Audi A7 Quattro, Audi A8, Audi A8L, Audi Q5, and
Audi Q7 models.[91]

Vehicle recall and consequences[edit]

On 29 September 2015, Volkswagen announced plans to refit up to 11 million vehicles affected
by the emissions violations scandal. The recall will affect models fitted with Volkswagen's EA 189
diesel engines, including 5 million at VW brand, 2.1 million at Audi, 1.2 million at Škoda and 1.8
million light commercial vehicles. SEAT said that 700,000 of its diesel models were affected. In
Europe, a total of 8 million vehicles are affected.[92]

In Germany, 2.8 million vehicles will have to be recalled, followed by the UK, with 1.2 million. In
France, 984,064 vehicles were affected, in Austria around 360,000, while in the Czech Republic
148,000 vehicles were involved (of which 101,000 were Škodas). In Portugal, VW said it had sold
94,400 vehicles with the software.[93][94] The repair may not require a formal recall; in the UK, for
example, the company will simply offer to repair the cars free of charge; a recall is only required,
"when a defect is identified that... could result in serious injury". As the rules violation involved
enabling emission controls during testing, but turning it off under normal conditions to improve
performance or fuel mileage, it has been speculated that the software update might make cars
perform less efficiently and impair fuel economy; according to VW, however, its proposed
solutions will be designed to achieve legal EU emissions compliance without impairing engine
performance or consumption.[95]

It was unclear as of September 2015 whether the repair would also include hardware
modifications, such as selective catalytic reduction upgrades.[96][97] The recall was scheduled to
start in January 2016, with all affected cars projected to be fixed by the end of the year. The
company also announced a review of all of its brands and models, including its supercar
marque Bugatti.[98]

On 8 October 2015, Volkswagen US CEO Michael Horn said in testimony before the US
Congress that it could nevertheless take years to repair all the cars, especially the older models,
due to the complex hardware and software changes that will be required. He also said that the
fixes will likely preserve fuel economy ratings but, "there might be a slight impact on
performance".[99][100]
On 10 October 2015, Consumer Reports tested a 2015 Jetta TDI and a 2011 Jetta Sportwagen
TDI in what they presumed was the special emissions testing, or cheat, mode. The 0 to 60 mph
(0 to 97 km/h) acceleration time of the 2011 Jetta increased from 9.9 to 10.5 seconds, and the
2015 car's time went from 9.1 to 9.2 seconds. The fuel economy of the 2011 car decreased from
50 to 46 mpg-US (4.7 to 5.1 L/100 km; 60 to 55 mpg-imp) and the 2015 car's fuel economy
decreased from 53 to 50 mpg-US (4.4 to 4.7 L/100 km; 64 to 60 mpg-imp). Consumer Reports's
Director of Auto Testing said that while the added fuel costs, "may not be dramatic, these cars
may no longer stand out among many very efficient competitors."[101] The method the magazine
used to engage cheat mode while driving required making assumptions about the ECU's
operations. Because disabling electronic stability control is a necessary step for running a car on
a dynamometer, the magazine assumed that this would put the car in cheat mode.[101] In order to
keep the electronic stability control from reactivating while driving, they disconnected the cars'
rear wheel speed sensors, simulating the inputs the ECU receives while the car is on a stationary
test rig, even though it was being driven on the road.[101] Besides front and rear wheel speeds, the
EPA had said that steering wheel movement, barometric pressure and duration of engine
operation were factors in triggering cheat mode.[11]

On 12 October 2015, Paul Willis, VW UK managing director told the Commons Transport Select
Committee that about 400,000 Volkswagen cars in the UK will need fuel injectors altered as well
as a software fix.[31] The vehicles requiring the hardware fix are the 1.6 litre diesel models. The
1.2 litre[102] and 2.0 litre diesel models will only require a software fix.[31]

On the same day, Volkswagen announced it would overhaul its entire diesel strategy, saying that
in Europe and North America it will switch "as soon as possible" to the use of selective catalytic
reduction technology to improve diesel emissions. It also announced plans to accelerate the
development of electric cars and plug-in hybrids, as well as petrol, instead of diesel engines for
smaller cars.[103]

On 12–13 October 2015, Volkswagen Group vehicle drivers in the UK started receiving
notification letters, to "rectify the issue".[104][105] Volkswagen later announced a timeline for UK
diesel recalls, citing March 2016 for 2.0 liter engines, June 2016 for 1.2. liter engines, and
October 2016 for 1.6. litre engines.[106]

VW suggested in the beginning of October 2015 to let car owners decide whether their cars
would be recalled for handling.[107][108] However, the German Federal Motor Transport Authority
(Kraftfahrt-Bundesamt, or KBA)[109] views the software as illegal,[110][111] and has ordered a full recall
of all affected cars in Germany. VW then decided to recall around 8.5 million cars in
Europe,[108] about a third of all its car deliveries since 2009.[112] KBA requires VW to send a recall
plan to KBA before the end of October for 2.0 liter cars, and end of November for 1.2 and 1.6 liter
cars.[111] If KBA approves a plan, VW can then start handling the cars. The German authorities
require that VW removes the software and that VW ensures that emission rules are
fulfilled.[107] Media estimates that the KBA procedure sets a precedence for how authorities in
other countries handle the case.[112][113]

On 18 November 2015, Autoblog reported that a VW fix for the affected 1.6 diesel engine is
under review by the KBA.[114] On 25 November 2015, VW said the fix involves a minor hardware
modification to the car's air intake system, alongside a software update.[115] This low-cost solution
contradicted earlier speculation regarding the possible fitting of new injection nozzles and
catalytic converters.[114] VW also said that its affected 1.2 liter and 2.0 liter diesel engines only
need a software update.[116][117] The fixes have been approved by the KBA, with the first recalls
likely to begin in January 2016.[8] According to VW, the measures aim to achieve legal EU
emissions compliance without impairing engine output, fuel consumption, or performance.[95] The
simple fixes with inexpensive parts and software are now possible but were not available when
the engines were developed, because engine technology understanding and intake flow
simulation capabilities have matured in the interim time, allowing for a better understanding and
options for addressing the burning of Diesel and air mixtures via intake flow shaping.[118] Although
there are three sizes of affected diesel engines, there exist more than a dozen variations to the
repairs, prompting VW to roll out the recalls in waves for each cluster of vehicle; the first model to
be repaired was the low-volume Volkswagen Amarok.[119] Due to stricter environmental
legislation, fixes for US vehicles are expected to take longer to produce and be more technically
complex.[95]

Communication actions[edit]
In France, the MediaCom media agency, which buys advertising for Volkswagen, warned the
French newspapers on 22 September that it would cancel planned Volkswagen and Audi
campaigns in case they would cover the emission violations.[120] Given the scale that the scandal
had already taken by that time, the threat had little effect on its coverage.

On the occasion of German Unity Day, Volkswagen launched an ad campaign in German

Sunday-newspapers. In the ad Volkswagen stated that actually at this point it wanted to express
its joy about the 25th anniversary of German reunification, its pride about having shaped the
country together with all people for the last 25 years, to give thanks for the confidence of the
customers it had experienced during all this time and that it wanted to thank all its employees
and trade partners in Germany, but concluded that it wants to express in one sentence, that it will
do everything to win back the confidence of its customers.[121]

New orders[edit]
Volkswagen's Belgian importer, D'Ieteren, announced that it would offer free engine upgrades to
800 customers who had ordered a vehicle with a diesel engine that was likely to have been fitted
with illegal software.[122][123]

Sales of vehicles with EA 189 engines were halted in some European countries, including Spain,
Switzerland, Italy, the Netherlands, Belgium and the UK.[122][124]

In the United States, VW has withdrawn its application for emissions certification for its 2016
diesel models, leaving thousands of vehicles stranded at ports. The company said the vehicles
contain software that should have been disclosed to and certified by the EPA.[125] EPA
has quarantined some 2016-models until it becomes clear that their catalysts perform the same
on the road as they do in tests.[126]

Compensation[edit]
On 9 November 2015, Volkswagen announced that 482,000 diesel Audi and VW owners in the
United States would be eligible to receive US$1,000 in vouchers, in addition to the US$2,000 it is
offering current VW owners for trade-ins.[127] On 18 November 2015, VW said that approximately
one quarter of the affected vehicle owners had applied to the program, which was estimated to
cost at least $120 million in benefits.[128] VW confirmed that it is offering vouchers including to
customers in Canada.[129] VW America said that accepting the gift cards does not prevent owners
from filing lawsuits.[130] VW also created a claims fund, managed by the the well-known mediation
attorney Kenneth Feinberg, which will offer full compensation packages (in the form of cash, buy-
backs, repairs or replacement cars) to the approximately 600,000 U.S. owners affected by the
scandal.[131] Despite earlier hints to the contrary, in December 2015 VW CEO Matthias Müller said
that customers outside the US and Canada should also expect some type of compensation
package: "we are working on an attractive package, let’s call it compensation, for reduction in
residual values in our cars”.[132][133] However, on 11 January 2016, a VW spokesman said “there
won’t be compensation. All the indications are that residual values are unaffected”;[134] the
company, which continued to face pressure from E.U. officials to compensate European drivers
as well,[135] blamed the confusion on "a slight mistranslation”.[134] Accused by E.U.
commissioner Elżbieta Bieńkowska that it is openly treating European consumers unfairly, VW
asserted that the situation in US and Canadian markets, where confidence in diesel technology is
"severely shaken" and clients need to wait longer for an engine fix due to tougher emissions
standards, is not "automatically comparable" with other markets.[135]

Consequences[edit]
Health consequences[edit]
Main article: Diesel exhaust

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Chemistry. See the talk page for details.WikiProject
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Deaths[edit]

A peer-reviewed study published in Environmental Research Letters estimated that

approximately 59 premature deaths will be caused by the excess pollution produced between
2008 and 2015 by vehicles equipped with the defeat device in the U.S., the majority due to
particulate pollution (87%) with the remainder due to ozone (13%). The study also found that that
making these vehicles emissions compliant by the end of 2016 would avert an additional 130
early deaths.[136][137]

Earlier studies published in media sources, that had not been subjected to peer review, provided
point estimates ranging from approximately 10 to 350 excess deaths in the U.S. related to the
defeat devices based on varying assumptions.[138]

Non-fatal health impacts[edit]

NO
2 is a precursor to ground-level ozone and may cause respiratory problems "including asthma,
bronchitis and emphysema".[139][140][141] Nitrogen oxides also amplify the effect of fine particulate
soot that causes heart problems, a form of air pollution estimated to kill 50,000 in the United
States annually.[142]
A peer-reviewed study published in Environmental Pollution estimated that the fraudulent
emissions are associated with 45 thousand disability-adjusted life years (DALYs) and a value of
life lost of at least 39 billion US dollars.[143]

Environmental consequences[edit]
NOx are also regulated as a pollutant for their contribution to acid rain, and to formation of a
visible brown cloud or smog due to both the visible nature of NO
2, and the tropospheric ozone created by NO. NO and NO
2 are not greenhouse gases, whereas N
2O is.[144] NO
2 is a precursor to ground-level ozone.

Legal and financial repercussions[edit]

Government actions[edit]

 Australia: The Australian Competition and Consumer Commission is investigating VW for

possible violations of consumer and safety standards.[145]
 Brazil: Volkswagen Brazil has confirmed that 17,057 units of its Amarok mid-size pickup
produced between 2011 and 2012 and sold in Brazil are equipped with the emissions
cheating software. The Brazilian Institute for the Environment and Renewable Natural
Resources (Ibama) launched an investigation, warning that VW could face fines up to R$50
million.[146]
 Canada: Environment Canada has announced that it has initiated proceedings to evaluate if
"defeat devices" were installed in Volkswagen vehicles to bypass emission control tests in
Canada.[147]
 China: China's General Administration of Quality Supervision, Inspection and
Quarantine announced the recall of 1,946 imported Tiguan SUVs and four imported Passat
B6 sedans, in order to fix the emissions software problems.[148][149]
 European Union: Government regulatory agencies and investigators have initiated
proceedings in France, Italy, Germany, Spain, the Netherlands, the Czech Republic and
Romania. Several countries have called for a Europe-wide
investigation.[150][151][152] The European Investment Bank (EIB) said it is considering recalling
VW loans, and announced its own investigation into the matter.[153] On 27 October 2015,
the European Parliament voted a resolution urging the bloc to establish a federal authority to
oversee car-emissions, following reports in the press that top EU environmental officials had
warned, since early 2013, that manufacturers are tweaking vehicles to perform better in the
lab than on the road. The resolution urged for tougher emissions tests to be fully
implemented in 2017, instead of being phased in between 2017-2019, as had been originally
planned.[154] However, the European Commission proceeded with passing legislation that
allowed the car industry an extra year before having to comply with the newer regulation.
Also, it was revealed that the new "realistic" EU driving emissions test will continue to allow
cars to emit more than twice the legal limit of nitrogen oxides (NOx) from 2019 and up to 50%
more from 2021.[155] The legislation, opposed only by the Netherlands, is considered a great
victory for the car industry, and has drawn stern critique from other MEPs. Dutch MEP Bas
Eickhout referred to the new test as "a sham”,[155] while liberal democrat MEP Catherine
 Bearder described the legislation as "a disgraceful stitch-up by national governments, who
are once again putting the interests of carmakers ahead of public health".[155] The EU
Parliament has voted to establish a special committee to investigate whether regulators and
executive officials, including the European Commission, have failed in their efforts to oversee
the car industry and its pollution testing regimes.[156]
 France: French authorities have opened an inquiry into Volkswagen over the rigging of
emission tests, with prosecutors investigating suspicions of "aggravated deception".[124] Other
cars from several makers were tested, including Renault, whose headquarters were raided
by fraud investigators in January 2016. Renault has subsequently recalled 15,000 cars for
emission testing and fixing.[157][158]
 Germany: German prosecutors have launched an investigation against former Volkswagen
chief executive Martin Winterkorn. Winterkorn had resigned over the scandal, saying he had
no knowledge of the manipulation of emissions results.[159] A German prosecutor later
clarified the status of these inquiries, saying it was looking into allegations of fraud from
unidentified individuals, but that Winterkorn was not under formal investigation.[160] Police
raided VW headquarters on 8 October 2015.[161] On 16 October 2015 there were 20
investigators working on the case, targeting "more than two, but a lot fewer than 10" VW
staff.[162] The KBA is testing 50 cars from different manufacturers in November 2015, both in
laboratory and on-road with PEMS.[163]
 India: Automotive Research Association of India (ARAI) has been instructed by the Indian
government to investigate if vehicles from Volkswagen had circumvented Indian laws and
regulations on vehicle emission testing. Ambuj Sharma, additional secretary at the Ministry of
Heavy Industry, said: "ARAI has been asked to submit its report within a week."[164][165] The
Indian Foundation of Transport, Research and Training (IFTRT) has demanded a probe into
Volkswagen's Confirmation of Production process for vehicles sold in India.[166] Government
of India has extended the deadline for the submission of the test results to the end of
October 2015.[167]
 Italy: Italy's competition regulator announced plans to investigate whether VW engaged in
"improper commercial practices" when promoting its affected diesel vehicles.[168] On 15
October 2015, Italian police raided VW offices in Verona, and the company's Lamborghini
offices in Bologna, placing six executives under investigation.[169]
 Netherlands: Netherlands has spent billions of euros on subsidies in energy-efficient cars in
the recent years. Jesse Klaver from the political partyGroenLinks responded that the
Netherlands must claim back money from the car manufacturers if it emerges that they have
committed fraud in the Netherlands.[170]
 Norway: Norway's prosecutors have opened a criminal investigation into possible economic
crimes committed by VW.[171]
 Romania: The Romanian Automotive Register (RAR) stopped issuing registration documents
for VW vehicles equipped with Euro 5 diesel engines.[172]
 South Africa: The departments of Environmental Affairs and Transport as well as the
National Regulator for Compulsory Specifications say they need to determine whether local
cars have been affected by the rigging of US vehicle emissions tests.
 South Korea: South Korea is the world’s eighth-largest diesel-car market.[173] Authorities there
announced pollution control investigations into cars manufactured by Volkswagen and other
European car-manufacturers. Park Pan-kyu, a deputy director at South Korea's environment
 ministry said: "If South Korean authorities find problems in the VW diesel cars, the probe
could be expanded to all German diesel cars".[174] In November 2015, defeat devices were
found in some Volkswagen models, which were then ordered to be recalled by the
Environment Minister, who also issued a fine of ₩14.1 billion.[175]The country's environmental
agency also filed criminal charges against VW, seeking up to $48 billion in penalties.
Johannes Thammer, managing director of Audi Volkswagen Korea, was placed under
investigation and faces up to five years in prison and a fine of up to ₩30 milion.[176] VW’s
recall plan for South Korea, submitted on 6 January 2016, was rejected by the authorities, as
it failed to meet a number of key legal requirements.[173]
 Spain: A Spanish court has opened a criminal probe against Volkswagen AG, aiming to
establish whether the company's actions broke any local laws.[177]
 Sweden: Sweden's chief prosecutor is considering starting a preliminary investigation into
Volkswagen's emissions violations.[178]
 Switzerland: Switzerland has banned sales of Volkswagen diesel cars, marking the most
severe step taken so far by a government in reaction to the emissions crisis.[179]
 United Kingdom: The Department for Transport announced on 24 September that it would
begin re-testing cars from a variety of manufacturers to ensure the use of "defeat devices" is
not industry wide.[180] The UK Parliamentary Transport Select Committee opened an enquiry
into Volkswagen Emissions Violations with evidence sessions on 12 October 2015 and 25
January 2016. The Select Committee published a letter from Paul Willis, Managing Director
of Volkswagen Group UK Ltd of 21 December 2015 stating: "In very simple terms, the
software did amend the NOx characteristics in testing. The vehicles did meet EU5 standards,
so it clearly contributed to meeting the EU5 standards in testing"[181]
 United States: The EPA announced that should the allegations be proven, Volkswagen
Group could face fines of up to US$37,500 per vehicle (approximately US$18 billion in total).
VW suspended sales of TDI-equipped cars in the US on 20 September 2015.[182] In addition
to possible civil fines, media reports state that the United States Department of
Justice Environment and Natural Resources Division is conducting a criminal probe of
Volkswagen AG's conduct.[183][184] The United States House Energy Subcommittee on
Oversight and Investigations has announced that it would hold a hearing into the
Volkswagen scandal. New York Attorney General Eric Schneiderman said that his
investigation was already underway and warned: "No company should be allowed to evade
our environmental laws or promise consumers a fake bill of goods".[185] Over 25 other states'
attorneys general, as well as the FBI in Detroit, are reported to be involved in similar
investigations.[171] Following the scandal, the EPA decided to broaden its investigations,
focusing on 28 diesel-powered models made by BMW, Chrysler, General Motors, Land
Rover and Mercedes-Benz. The agency will initially focus on one used vehicle of each
model, and will widen the probe should it encounter suspicious data.[186] On 12 November
2015, the Federal Bureau of Investigation confirmed to engineering
magazine Ingeniøren that FBI in Detroit has an ongoing investigation,[187] after previous
unconfirmed reports.[188] The EPA has described the hidden VW pollution as "knowing
endangerment".[189] On 4 January 2016, the US justice department, on behalf of the EPA,
filed a lawsuit against VW in a federal court in Detroit, Michigan. The complaint, seeking up
to $46 billion in penalties for Clean Air Act violations,[190] alleges that VW equipped certain 2.0
and 3.0 liter diesel-engine vehicles with emissions cheating software, causing NOx pollution
to exceed EPA's standards during normal driving conditions. The suit further claimed that
"efforts to learn the truth about the (excess) emissions ... were impeded and obstructed by
material omissions and misleading information provided by VW entities",[190] while "so far
recall discussions with the company have not produced an acceptable way forward";[91][191] On
9 January 2016, US officials criticized VW for citing German law in order to withhold
documents from a group of states investigating the company's actions. New York Attorney
General Eric Schneiderman also complained over VW's slowness in producing documents
from its US files, claiming the company "has sought to delay responses until it completes its
‘independent investigation’ several months from now".[190] On 12 January 2016, US regulators
rejected VW's recall plans for its affected 2.0 liter diesel engines, submitted to CARB in
December 2015, claiming that these "do not adequately address overall impacts on vehicle
performance, emissions and safety".[192][193] Volkswagen confirmed that its discussions with
CARB will continue, and said that the company is working on bringing "a package together
which satisfies our customers first and foremost and then also the regulators".[192] The states
of West Virginia, New Mexico, Texas and Harris County, Texas, all filed separate lawsuits
seeking restitution from VW. The company also faces investigations by 48 U.S. state
attorneys (as of February 2016).[194][195]