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Emissions scandal latest: Mitsubishi president steps down, Suzuki involved
UPDATE: Mitsubishi boss steps down as Suzuki admits to "discrepancies"
UPDATE: 11am, 18 May 2016
Mitsubishi president Tetsuro Aikawa has announced he will step down following his company’s admission to cheating fuel efficiency tests, something that dates back to 1991 when Japan introduced new regulations.
Following the admission in April, Mitsubishi’s shares tumbled 50 per cent. Quite what they’ll do now Aikawa – who became president and chief operating officer of Mitsubishi in June 2015 – has stepped aside, remains to be seen.
Elsewhere, two other Japanese carmakers now have their names involved in the controversy. Suzuki has announced “discrepancies” in fuel economy and emissions testing of 16 Japanese market models, but says that the end results of the tests require no amendment. Its shares have fallen nonetheless.
Nissan, meanwhile, has faced accusations from South Korea that some of its UK-made Qashqais have defeat devices fitted to their engines. The South Korean government apparently plans to fine Nissan round £200,000, but the Japanese company firmly denies any wrongdoing.
UPDATE: 3pm, 12 May 2016
A Volkswagen statement has asked shareholders to support the actions of its senior management in the wake of the emissions scandal.
“The Supervisory Board of Volkswagen AG has recommended to Volkswagen’s 2016 Annual General Meeting that the actions of the serving members of the Board of Management in fiscal year 2015 be ratified,” its release reads.
The company’s annual general meeting takes place on June 22, and there’ll be a vote of shareholders asking them to endorse (or not) the actions of top management over the previous year.
“This recommendation is based on information currently available from the not yet concluded investigation into the diesel matter by U.S. law firm Jones Day,” the statement continues.
“Although the investigation by Jones Day is still ongoing, according to information currently available, no serious and manifest breaches of duty on the part of any serving or former members of the Board of Management have been established that would stand in the way of granting ratification at this time.”
In short, then, it appears there’s currently no evidence to suggest a decision to fit defeat devices to VW cars was made at board level, though the report is not yet complete. What impact this all has on shareholders’ votes we’ll see next month.
UPDATE: 12pm, 26 April 2016
Mitsubishi has admitted to falsifying fuel test data since 1991. It’s a big admission that follows Nissan’s uncovering of more recent test cheating last week.
The number of cars affected by Mitsubishi using false tyre pressures on recent kei cars was around 600,000; it’s unclear how many cars could be affected going back to 1991, but that number could swell notably.
“We don’t know the whole picture and we are in the process of trying to determine that,” Mitsubishi president Tetsuro Aikawa announced at a press conference. “I feel a great responsibility.”
More details are expected later this week, while external lawyers have been installed to investigate the issue and issue a full report within three months.
In the meantime, the value of Mitsubishi’s share values have tumbled 50 per cent since the scandal first broke.
UPDATE: 3pm, 22 April 2016
Volkswagen Group has revealed the first concrete effects of the emissions scandal on its finances.
After delaying its annual results, it today reported an annual loss for the year 2015 of €1.36 billion, or £1.07bn. By comparison, in 2014 it made a stupendous after-tax profit of €11.07bn (£8.65bn). That’s a pretty horrifying reversal of fortune.
VW’s accountants put aside €16.2bn (£12.7bn) for future costs relating to the emissions scandal. That’s the main reason for the loss. Operating income was actually very similar to the previous year.
Car sales fell by only two per cent, but that has a lot to do with soft demand in China and Brazil, places where the emissions issue doesn’t apply. The overall revenue from sales was up – meaning VW was selling those vehicles at a significantly higher price, because of newer, more upmarket models across the brands.
Critically today, VW also stated finally that it has got to a provisional agreement with the US authorities over the cheating cars. We reported yesterday that a buyback programme is part of this.
Since VW has settled in principle with three statutory bodies – the US Environmental Protection Agency, US Department of Justice and California Air Resources Board – we can assume the company now has a better idea of the costs it faces, both in putting things right with owners and with fines for selling nearly 600,000 illegal cars.
The exact details of the programme are still being worked out, so they’re secret, but the judge, Charles Breyer, said this: “The agreement will give consumers several options, including the option to have Volkswagen buy back their vehicle; and, subject to governmental approval after further testing, the option to have the consumer’s vehicle modified in accordance with the agreement; and for those consumers who have leased their car, to cancel the lease and return the car to Volkswagen.” He added that consumers can also expect “substantial compensation” in addition.
But the Government was also keen all along for VW to do something about the damage caused by the cumulative extra NOx emissions for all the years since the cars were sold. Over to Judge Breyer: “The agreement will fully address any excess emissions of NOx coming from these vehicles, and the environmental consequences from these excess emissions, by establishing a fund for appropriate remediation efforts. In addition to all these other matters, Volkswagen will be required to commit other funds to promote green automotive technology.”
VW adds it has reached “an agreement on the basic features of a settlement with the class action plaintiffs in the lawsuit in San Francisco”. Again, the limits of the damage might be in sight.
But it’s not out of the woods yet. The disclaimer reads, “Ongoing investigations by the Department of Justice, Criminal Division, and the State Attorneys General are not prejudiced by these agreements in principle.”
Besides which, this is all just about the US. In Europe, where some 11 million cars were sold with defeat devices, we don’t yet know what fines or owner compensation will follow. VW has a big recall programme underway, and obviously hopes that will put an end to the matter in Europe.
UPDATE: 2pm, 21 April 2016
Volkswagen will offer to buy back some half a million VWs and Audis in the US that cheated emissions tests.
Today is the deadline a US court gave for the company to fix the issue. It seems no technical fix could be developed that would bring them into compliance. The owners will also be compensated up to $5000 (about £3500) each, reports say.
Volkswagen is expected to announce details of the deal later today. We will update the story as it develops.
This is all rather predictable. Some analysts always said a buyback would be the least messy option for the company to draw a line under the scandal, and TopGear Magazine mentioned buybacks in early November. If the cars are taken off the road, the company hopes to limit exposure to future legal actions for polluting the air.
That said, it still faces a colossal suit from the Department of Justice.
And, as we also pointed out last November, “Think of the environmental cost of scrapping half a million cars.” It’s a year’s output from a large factory…
The buyback doesn’t apply to Europe. Because our NOx standard was looser, VW has been able to design recalls that get the cars into compliance with the standards that applied when they were sold. It’s now deep into a massive recall programme to make the changes. The technical fixes are relatively straightforward, which makes one wonder why the cars cheated in the first place. No compensation is being offered here.
UPDATE: 11am, 20 April, 2016
Mitsubishi has admitted to using false tyre pressures to flatter fuel economy of vehicles in test procedures. The admission centres around four cars, all of them kei-regulation city cars, which only sell in Japan.
As well as Mitsubishi’s eK Wagon and eK Space, there are two Nissans, the Dayz and Dayz Roox. They are related to the eK models and are produced by Mitsubishi, while it emerges it was Nissan who discovered the discrepancy.
In total, 625,000 cars are involved, the vast majority of them wearing Nissan badges. All four models have been taken off sale as investigations begin.
“The wrongdoing was intentional,” said Mitsubishi Motors president Tetsuro Aikawa. “It is clear the falsification was done to make the mileage look better.
“Why they would resort to fraud to do this is still unclear,” Aikawa, previously unaware of the wrongdoing, added. Despite this, he said “I feel responsible.”
UPDATE: 9am, 20 April, 2016
A new name is under scrutiny today, after Mitsubishi admitted to failing fuel economy tests. While unconnected to VW’s issues, it’s the first time a Japanese carmaker has been implicated in the new climate of concern for the honesty of emissions and economy testing. At least 600,000 cars are said to be affected.
“One of our models was found to have failed part of a fuel economy test,” a Mitsubishi spokesman said, though the specific model or engine setup has not yet been named. It’s already had a big impact, the company’s shares plummeting 15 per cent in one day, their biggest drop in 12 years.
More info as we have it.
UPDATE: 7am, 3 March, 2016
An official statement by Volkswagen has confirmed that its former CEO Martin Winterkorn knew of the diesel emissions defeat device back in May 2014.
The scandal first came to public light last September, and Winterkorn resigned soon after, saying “I am shocked by the events of the past few days” in his statement.
This official Volkswagen statement - not the result of a full investigation, rather part of its defence against a lawsuit by shareholders which it considers to be “without merit” - says that Winterkorn received a message on May 23 2014 about emission irregularities and US market diesel cars, following an independent study. “Whether and to which extent Mr. Winterkorn took notice of this memo at that time is not documented,” the statement says.
He was further contacted in 14 November 2014, when he was informed a fix on those cars would cost 20 million euros. It appears proper discussions about the issue began in July 2015, “on the periphery of a regular meeting about damage and product issues,” but details of this meeting are yet to be confirmed.
“Emission deviations between test bench and road operation exist at all automobile manufacturers and are by no means automatically attributable to violations of regulations,” the statement continues, suggesting such irregularities are not rare. “Volkswagen expressly regrets that, looking back, the situation is different.”
The statement dates the scandal back 11 years, to VW’s decision to launch diesel cars in America, whose governing bodies imposes tight restrictions on the emissions released by such units.
“The starting point of the diesel matter was, in hindsight, the strategic decision by Volkswagen in 2005 to start a major diesel campaign in the United States and to facilitate a breakthrough for this technology which at the time was already very popular in Europe,” it reads.
The reasons for the timing of the statement, released late last night (March 2 2016) are not detailed, but VW’s press days at the Geneva motor show were not dominated by its contents.
“The Company emphasises that this examination does not replace the independent investigation for the complete clarification of the diesel matter which is being conducted by the law firm Jones Day and is ongoing,” it reads. “
The Company is making this public announcement to correct the selective and incomplete publication of documents in the media about the diesel matter and to avoid having partial excerpts of its statement of defence published in the media.”
UPDATE: 3pm, 19 January, 2016
Renault has recalled 15,000 cars after the discovery of excessive emissions in real-world driving conditions. This has been confirmed by Segolene Royal, the energy minister in France, as well as this company statement:
“The Renault Group confirms that a vehicle recall is in place for approximately 15,000 Renault vehicles fitted with its dCi 110 engine. The recall operation seeks to address an error in the engine’s calibration unit. This is a known issue that was corrected on production vehicles from 4th September 2015.”
Versions of the dCi 110 are fitted to models including the Captur and Megane.
What’s key, though, is that these emissions breaches are not related to a defeat device, as in VW’s case. The recall is also not a direct consequence of investigations at Renault factories last week, detailed in the 14 January update below.
“Renault Group vehicles are not equipped with fraudulent software or systems designed to bypass the emission control system,” a company statement reads, before confirming it has “fully cooperated and will continue to fully cooperate with any investigations by the authorities.”
Renault is also keen for regulations to better reflect real world use of cars. Its statement continues: “The regulations must evolve. It is quite normal to find differences between laboratory testing and the results obtained with on-road use. The NEDC homologation tests should evolve to reflect actual usage. Renault fully supports this evolution.”
UPDATE: 3pm, 14 January, 2016
Renault has confirmed that fraud investigators have carried out “material investigations” at three sites, in order to confirm findings from an independent technical commission.
That technical commission was established in order to verify that French car manufacturers have not installed so-called ‘defeat devices’ in their cars, in the wake of the Volkswagen emissions scandal.
The French Homologation Authority is currently testing 100 vehicles, including 25 Renault cars. In a statement, Renault said the agency for energy and climate “already considers the on-going procedure would not reveal the presence of a defeat device on Renault vehicles”.
In line with this on-going investigation, Renault said the DGCCRF went to its HQ, the Renault Technical Centre in Lardy and the Technocentre in Guyancourt.
“Renault’s teams are fully cooperating with the independent technical commission and the additional investigations decided by the Ministry of Economy,” the company said.
Reports of the investigations however, have sent Renault shares tumbling, by as much as 20 per cent.
UPDATE: 10am, 14 January, 2016
The California Air Resources Board has rejected Volkswagen Group of America’s submitted recall plan for its 2.0-litre diesel engine, on cars sold in the state between 2009 and 2015.
In a statement, CARB said it is to continue its “investigation and technical evaluations with EPA, in order to return the vehicles to legally required emission levels, determine mitigation for past and future environmental harm, and assess penalties”.
They said VW’s recall plan fell short in a number of areas including the proposed plans containing gaps and lacking sufficient detail, the descriptions of proposed repairs lack enough information for a technical evaluation, and that the proposals do not adequately address overall impacts on vehicle performance, emissions and safety.
CARB is due to receive the recall plan for VW’s 3.0-litre diesel engine on 2 February 2016.
CARB chair Mary D Nichols said: “Volkswagen made a decision to cheat on emissions tests and then tried to cover it up. They continued and compounded the lie and when they were caught they tried to deny it. The result is thousands of tons of nitrogen oxide that have harmed the health of Californians. They need to make it right. Today’s action is a step in the direction of assuring that will happen.”
UPDATE: 4pm, 4 November
Following yesterday’s announcement by the EPA of a second notice of violation issued with regard to the VW Group’s 3.0-litre diesel V6 engine, Porsche has announced it will stop selling the Cayenne diesel in the US.
In a short statement, the company said: “Porsche Cars North America, Inc. today decided, in view of the unexpected U.S. EPA notice received yesterday, to voluntarily discontinue sales of model year 2014 through 2016 Porsche Cayenne Diesel vehicles until further notice. We are working intensively to resolve this matter as soon as possible. Customers may continue to operate their vehicles normally.”
UPDATE: 1pm, 4 November
As VW’s new guard deepens its investigation, the revelations keep emerging. Today’s big story is that petrol cars are now implicated, and CO2 claims – far more important to us than the NOx levels that this scandal has so far revolved around – have also been ‘set too low’ during official testing. This means everyday running costs are being dragged into the debate fully for the first time.
“During the course of internal investigations, irregularities were found when determining type approval CO2 levels,” reads a VW statement. “Based on present knowledge around 800,000 vehicles from the Volkswagen Group could be affected. An initial estimate puts the economic risks at approximately two billion euros.”
Yep. This latest sting could cost VW an additional £1.5billion.
“Under the ongoing review of all processes and workflows in connection with diesel engines,” the statement continues, “it was established that the CO2 levels and thus the fuel consumption figures for some models were set too low during the CO2 certification process. The majority of the vehicles concerned have diesel engines.”
That last line is key – it implicates petrol engines in the VW emissions scandal for the first time. Though don’t expect the clunky ‘dieselgate’ tag to be discarded anytime soon…
UPDATE: 2pm, 3 November
The US Environmental Protection Agency has alleged that the VW Group’s 3.0-litre V6 diesel engine has also been installed with a ‘defeat device’.
The EPA said a second Notice Of Violation (NOV) of the Clean Air Act is being issued to Volkswagen AG, Audi AG, Volkswagen Group of America, Porsche AG and Porsche Cars North America.
“The NOV alleges that VW developed and installed a defeat device in certain VW, Audi and Porsche light duty diesel vehicles equipped with 3.0-litre engines for model years 2014 through 2016 that increases emissions of nitrogen oxide (NOx) up to nine times EPA’s standard,” said the EPA.
Affected models include the 2014 VW Touareg, the 2015 Porsche Cayenne, and 2016 models of the Audi A6 Quattro, A7 Quattro, A8, A8L and Q5.
“The NOV covers approximately 10,000 diesel passenger cars already sold in the US since 2014,” the statement continues. “In addition, the NOV covers an unknown volume of 2016 vehicles.”
In a statement released today, Volkswagen said: “The United States EPA informed Volkswagen Aktiengesellschaft on Monday that vehicles with V6 TDI engines had a software function which had not been adequately described in the application process.
“Volkswagen AG wishes to emphasise that no software has been installed in the 3.0-litre V6 diesel power units to alter emissions characteristics in a forbidden manner.
“Volkswagen will cooperate fully with the EPA to clarify this matter in its entirety,” VW added.
UPDATE: 2pm, 8 October
The unfortunate revelations show no sign of abating. Volkswagen’s US boss, Michael Horn, has today admitted he was informed that some VW diesels did not comply with emissions regulations in early 2014, around 18 months before the scandal broke.
“In the spring of 2014 when the West Virginia University study was published, I was told that there was a possible emissions non-compliance that could be remedied,” reads part of Horn’s testimony to the US House of Representatives investigating VW.
“I was informed that EPA regulations included various penalties for non-compliance with the emissions standards and that the agencies can conduct engineering tests which could include ‘defeat device’ testing or analysis. I was also informed that the company engineers would work with the agencies to resolve the issue.”
Horn’s testimony goes on to outline five steps the company is taking to remedy the situation, the final one being “regular and open communication”, something a number of customers and commenters have accused VW of lacking.
Horn apologises for the scandal twice in his testimony, and makes pledges to rectify VW’s standing.
“We are determined to make things right. This includes accepting the consequences of our acts, providing a remedy, and beginning to restore the trust of our customers, dealerships, employees, the regulators, and the American public.
“We will rebuild the reputation of a company that more than two million people worldwide, including dealers and suppliers, rely upon for their livelihoods.”
This week has also seen VW gain a new chairman - Hans Dieter Poetsch moving into the role – while company chiefs have confirmed recalls for affected cars are likely to last the whole of 2016, the first cars being fixed in the new year.
UPDATE: 2pm, 6 October
The fallout from Volkswagen’s emissions scandal continues. Today new CEO Matthias Muller – who arrived from Porsche to replace Martin Winterkorn – addressed VW employees at the company’s headquarters.
“We will review all planned investments, and what isn’t absolutely vital will be cancelled or delayed,” Muller told staff. With VW’s research and development budget the world’s largest last year – at close to £12 billion – it appears the natural place to find the cash likely needed to pay potentially large fines, as well as the outlay needed to fix the 11 million affected cars.
This is, potentially, dark news for any exciting projects the VW Group has in the pipeline. After all, the company that his given us some brilliantly innovative stuff in recent years, the XL1 and the Bugatti Veyron among the more glorious results of its R&D drive.
Stuff like the XL Sport, a VW Group F1 entry, and even replacements for esoteric products like the Phaeton could fall into the ‘what isn’t absolutely vital’ category. Only time will tell exactly what is affected.
“Our most important task will be to regain lost confidence with our customers, partners, investors and the general public,” said Muller. “Only when everything comes to the table, only when things are completely explained, only then will people trust us again.
“Believe me, I too am impatient. But in this situation, in which we are dealing with four brands [VW, Audi, Seat and Skoda] and many models, care is more important than speed.”
Technical fixes for engines fitted with the cheat code are close, and will vary between simple software tweaks and hardware swaps. In the meantime, VW owners in the UK can find out if their car is affected by inputting their VIN to this official website.
Volkswagen’s UK sales in September look to have stayed strong, with the Golf and Polo the fourth and fifth best-selling cars respectively. Though with the scandal breaking towards the end of the month, October’s figures may be a better indicator of any damage to public opinion.
UPDATE: 12pm, 30 September
The Volkswagen Group has announced that nearly 1.2 million cars in the UK have been affected by the emissions scandal.
In a statement released today, the Group confirmed that the owners of 1,189,906 cars in the UK will be notified to get “their vehicles corrected in the near future”. A fix is currently being developed that’ll be presented to the ‘responsible authorities’ before the end of October.
They are made up as follows:
Volkswagen passenger cars: 508,276
Volkswagen commercial vehicles: 79,838
“Customers with these vehicles will be kept informed over the coming weeks and months,” said Volkswagen. “All of the Group brands affected will set up national websites to update customers on developments.”
VW also pointed out that all petrol engines, as well as the V6 and V8 diesel engines, are unaffected.
UPDATE: 4pm, 28 September
Up to 2.1 million Audi vehicles worldwide could be dragged into the Volkswagen emissions scandal.
According to Reuters, model lines including the A1, A3, A4, A5, A6, TT, Q3 and Q5 are affected by the so-called ‘defeat device’.
The report also adds that ousted Volkswagen boss Martin Winterkorn is to be investigated by German prosecutors over ‘allegations of fraud in the sale of cars with manipulated emissions data’.
UPDATE: 7pm, 25 September
Porsche boss Matthias Muller is to be the new CEO of Volkswagen, the beleaguered German giant today announced.
Muller replaces Martin Winterkorn, who stood down earlier this week in the wake of the US emissions scandal. In a statement, the 62-year-old German vowed to ‘leave no stone unturned’ in investigating how some 11 million diesels were fitted with a ‘defeat device’ allowing them to cheat official NOx tests.
“My most urgent task is to win back trust for the Volkswagen Group, by leaving no stone unturned and with maximum transparency,” said Muller. “Under my leadership, Volkswagen will do everything it can to develop and implement the most stringest compliance and governance standards in our industry. If we manage to achieve that, then the Volkswagen Group […] has the opportunity to emerge from the crisis stronger than before.”
Muller’s career started at Audi in 1977, becoming product chief of the German brand in 1995. He was placed in charge of Audi and Lamborghini model lines in 2002, and by 2007 was given responsibility for product strategy across the entire VW Group by Winterkorn.
At the same time as appointing Muller to the top job, the VW Group announced sweeping changes across its management. Seat chairman Jurgen Stackmann becomes VW’s sales and marketing boss, with Audi’s sales and marketing chief Luca de Meo moving to replace him.
Despite speculation he would be dismissed, Michael Horn, president and CEO of the VW Group in the USA, will retain his job.
It was also announced that the Group would form a new ‘Porsche brand group’ incorporating Bugatti and Bentley, with Wolfgang Durheimer looking likely to become its boss. Lamborghini, however, won’t form part of this group utilising ‘the sports car and mid-engined toolkit’, instead continuing to share a stable with Ducati.
UPDATE: 2:30pm, 24 September
Volkswagen group cars in Europe are also implicated in the emissions scandal, it has been confirmed. German transport minister Alexander Dobrindt revealed a government commission investigating the scandal had been told by VW executives that “vehicles in Europe with 1.6 and 2.0 litre diesel engines were also affected by the manipulations”. The additional engine draws in more models to the scandal.
Dobrindt added: “We will therefore continue to work intensively, together with Volkswagen, to find out exactly which vehicles are involved, in order to inform the public further”.
He also confirmed that spot-checks are being carried out on cars made by other manufacturers.
UPDATE: 5pm, 23 September
TopGear.com’s industry analyst Paul Horrell has weighed in on Winterkorn’s resignation.
“Winterkorn says he is shocked by the wrongdoing, and that he didn’t know about it at the time,” writes our man PH. “Either those very close to the top knew about the cheating, or else they ran a company whose culture was dysfunctional.
“The German media is touting Matthias Muller, Porsche boss, as a replacement for Winterkorn. But Muller is an Audi and VW lifer who was responsible for product strategy for all VW Group brands up to 2010.”
UPDATE: 4:30pm, 23 September
Volkswagen Group CEO Martin Winterkorn has announced his resignation.
In an official statement released today, the 68-year old head of the beleaguered car company said he would be leaving to make way for a fresh start, following news that VW admitted to a code in its diesel engine software that skewed emissions.
“I am shocked by the events of the past few days,” he said. “Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group.
“As CEO I accept responsibility for the irregularities that have been found in diesel engines and have therefore requested the Supervisory Board to agree on terminating my function as CEO of the Volkswagen Group. I am doing this in the interests of the company even though I am not aware of any wrong doing on my part.
“Volkswagen needs a fresh start – also on terms of personnel. I am clearing the way for this fresh start with my resignation,” he said.
Volkswagen has not named a successor, but German media suggests Matthias Muller, boss of Porsche, is the favoured candidate.
Regulators in America have charged VW with cheating emissions tests, a charge affecting nearly half a million cars sold over the past seven years.
The problem centres around a code buried within Volkswagen’s 2.0-litre diesel engine software. The code detects when it is being driven on an emissions test cycle, and turns on its full controls. The controls are reduced elsewhere, emitting more NOx.