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All you need to know about the Volkswagen crisis

The US government could fine Volkswagen $37,500 per vehicle for the violations, a total of more than $18 billion.

BT Online | September 29, 2015 | Updated 17:15 IST
All you need to know about the Volkswagen crisis
US government could fine Volkswagen $37,500 per vehicle for the violations. (Photo: Reuters)

Volkswagen AG, the world's biggest carmaker by sales, is caught in a fix with the US authorities over the emissions of its diesel models. The German automobile manufacturer has admitted that it played foul in the US emission tests. The probe is currently on while the company shares have nosedived.

Here are things to know about the German car manufacturer's crisis:

  1. Fixing affected cars: Volkswagen on September 28 said it would recall up to 11 million vehicles to ensure its diesel models complied with emissions standards. It will ask customers "in the next few days" to have diesel models equipped with manipulated software refitted and brief authorities on technical fixes in October, new Chief Executive Matthias Mueller said.
  2. Ex-boss Winterkorn faces enquiry: The German prosecutors have begun enquiry against the former Volkswagen Chief Martin Winterkorn in the emissions scandal. Winterkorn, who quit Volkswagen, had earlier said that he had no knowledge of the manipulation in emission tests despite being at the helm of the company.
  3. Volkswagen appoints new Chief Executive: Volkswagen named Matthias Mueller, the head of its Porsche sports car brand, as its new chief executive after Martin Winterkorn stepped down.
  4. Volkswagen faces India probe: The government has asked Automotive Research Association of India (ARAI) to inquire if Volkswagen had followed the same practice during emission tests in India as it did in the US.
  5. Volkswagen CEO resigns: Volkswagen Chief Executive Martin Winterkorn resigned on September 24 succumbing to pressure following the revelation of the emissions scandal. "Volkswagen needs a fresh start - also in terms of personnel. I am clearing the way for this fresh start with my resignation," Winterkorn said after a marathon meeting with the executive committee of the company board.
  6. Volkswagen likely to fire staff: Volkswagen is likely to start firing people responsible for rigging US emissions tests, two sources familiar with the plans said.
  7. The German automobile manufacturer cheated on US emission tests of its diesel-powered vehicles, including Passat, Audi A3, VW Jetta, Beetle, Golf and other cars. Volkswagen said that that falsified US emission tests could affect as many as 11 million cars around the globe.
  8. The US Environmental Protection Agency (EPA) has said that Volkswagen rigged the emission tests so that it would appear that its models were emitting less nitrogen oxides. The company's software turned on the cars' full emissions control systems when the cars were being tested by the US authorities, and then turned off those systems during normal driving. However, it helped improve the mileage of these cars as the emissions control systems were turned off while driving.
  9. Why did Volkswagen do this: The automobile manufacturer is assumed to have resorted to the cheap software for manipulating the US emission tests in order to save costs on the additional hardware.
  10. What's in store for Volkswagen: The US government could fine Volkswagen $37,500 per vehicle for the violations, a total of more than $18 billion. US Department of Justice has started a criminal probe into the allegations, which cover several VW and Audi-branded diesel models including the Audi A3, VW Jetta, Beetle, Golf and Passat.
  11. South Korea will probe the emissions from three of Volkswagen's models. The South Korean probe will involve 4,000 to 5,000 Jetta, Golf and Audi A3 vehicles produced in 2014 and 2015. German car sales in South Korea have soared since a 2011 free-trade deal eliminated duties on vehicles imported from Europe. Volkswagen and Audi accounted for 28.2 per cent of all foreign cars sold in the first eight months of 2015, according to the Korea Automobile Importers and Distributors Association.
  12. Car models affected: The Jetta, Beetle, Audi A3 and Golf from the 2009-2015 model years are affected, as well as the Passat from the 2014-2015 model years. Volkswagen has halted the sale of 2015 models and is prohibited from selling 2016 models until they are fixed.
  13. What Volkswagen says: The company said that it would set aside 6.5 billion euros ($7.3 billion) in its third quarter to cover the required service measures and win back the confidence of its customers. Volkswagen former chief executive Martin Winterkorn had said the company will fully cooperate with government investigations and has ordered an internal probe. Winterkorn said, "I personally am deeply sorry that we have broken the trust of our customers and the public." Volkswagen AG's US head said he was confident the German automaker would take the necessary steps to restore customer confidence after it "totally screwed up" by rigging emissions tests of diesel-powered vehicles in the United States.
  14. What the current owners of Volkswagen diesel models should do: The owners of Volkswagen diesel models are expected to be notified when the company is ready with a free upgrade to fix the emissions control system.
  15. How the cheating surfaced: Evidence of increased toxic emissions at Volkswagen first emerged in 2014, prompting the California Air Resources Board to start investigating. Volkswagen initially denied it was trying to game the inspections, attributing the higher emissions readings to "various technical issues and unexpected in-use conditions." The stonewalling continued until the agency threatened to withhold certification for the carmaker's 2016 models, the EPA said. "Only then did Volkswagen admit it had designed and installed a defeat device" that purposely lowered emissions while a vehicle was being inspected, the agency said.
  16. Launch of Passat: Volkswagen amid the crisis launched its latest version of Passat sedan in New York. But the car cannot go up for sale till the company fixes the emission issue.


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