The Latest on VW’s “Defeat Device” Catastrophe

One of many VW jokes on the internet.

One of many VW jokes on the internet.

Volkwagens are equipped with a special kit that takes control of a car’s brakes after a smash to slow it down and help avoid subsequent collisions. If only the car-maker itself were equipped with a similar device. In September the firm admitted rigging 11 million diesel vehicles worldwide to cheat emissions tests of nitrogen oxides (NOx). American regulators now say that even more vehicles than initially discovered have test-tricking software. On November 3rd, VW confessed that it overstated claims about the carbon-dioxide (CO2) emissions and fuel efficiency of 800,000 cars, including some with gasoline engines.

VW is vague about its latest misdeeds, referring to “irregularities” in CO2 levels during testing. That suggests that the cars’ software suppressed emissions in tests before reverting to a more polluting mode in normal driving conditions. VW does not reveal how many of the cars with CO2 problems are among the 11 million that cheated the NOx tests. Presumably, the cars are in Europe since the U.S. measures fuel efficiency directly, not CO2 as a proxy for it.

VW’s third-quarter results shows that its sales have not yet suffered much as a result of the scandal, though it can look forward to a lot more bad publicity to come. This will include lawsuits and possibly the indictments in the U.S. of senior managers.

This latest chapter threatens to have a more serious impact. Fixing cars with the NOx problem is likely to mean that their fuel efficiency goes down, but only if their owners choose to have it fixed. Those cars with the CO2 problem have already forced their owners to spend more on fuel than they may have expected. VW’s reputation for good mileage is likely to be dented. Overall, VW’s reputation will ultimately be crushed due to deceiving consumers. We are waiting to find out where the end to all of this mess is.

Pressure is mounting on VW’s new CEO, Matthias Müller. Though VW denies the latest charge, it has halted sales of the cars in America. The accusation casts a shadow over Müller, who moved to the very top from being the head of Porsche. VW was always unlikely to appoint an outsider to replace Martin Winterkorn, who resigned as CEO shortly after the scandal broke. It’s unclear that someone that has been so intimately involved with VW can pick up the pieces of the upheaval in the corporate culture that is required.