VW may buy back 115,000 emission-troubled diesel vehicles

Dieselgate, Volkswagen’s emissions scandal, took a new twist today as the automaker admitted it may have to buy back nearly one-quarter of the diesel vehicles sold in the United States. According to a German newspaper, Sueddeutsche Zeitung, the automaker said it faced either refunding the purchase price of U.S. diesel vehicles or providing a steep discount on new replacement models. The newspaper report, quoted by Reuters, did not cite specific sources for its information.

VW also expects that the remainder will need major refits that will require them to be tied up for extended periods, as parts of the exhaust systems need to be rebuilt and approved. This step will require an enormous expenditure from the automaker. Volkswagen had no comment.

In an interview Tuesday with Reuters, Herbert Diess said he expected the automaker to bring the vehicles affected by the emissions scandal into compliance with U.S. regulations. He indicated, though, that bringing the older 2.0-liter diesel powerplants into compliance would be harder than later engines. Diess, while not saying whether VW would buy back non-compliant vehicles, said he believed that the carmaker would be able to reach an agreement with U.S. regulators.

While Diess was optimistic, the Environmental Protection Agency (EPA) sounded a gloomier note yesterday when it said that “discussions with” the automaker “have not produced an acceptable way forward.” The agency said that it has continued to push the automaker to develop “effective, appropriate remedies as expeditiously as possible.”

In other developments this week,

  • Sueddeutsche Zeitung reported that 50 VW employees have assisted in cleaning up the scandal as part of the automaker’s internal whistleblower program. Reportedly, some division heads are among those taking part in the internal amnesty program.
  • The Justice Department Monday launched a civil lawsuit that claims the automaker violated clean air laws. The suit seeks $48 billion in damages. The automaker may still face criminal charges.
  • Volkswagen officials were to meet with regulatory officials in Washington to discuss the issues.

The Dieselgate scandal that began with the automaker’s admission last September that it had installed computer cheatware, designed to fool U.S. diesel emissions tests, on as many as 600,000 Volkswagen and Audi luxury cars and SUVs. The scamware was designed to look for emissions testing. If the software determined a test was in progress, a software routine tightened up emissions controls so that the vehicles under test passed the tougher U.S. standards of oxides of nitrogen. As soon as the tests ended, the software reset the engines to “normal” operation enhancing performance and at the expense of emissions. Testing found that some vehicles emitted as much as 40 times the allowable levels of NOx.