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Feds allege widespread Volkswagen cheating on clean-air rules

Volkswagen intentionally installed software in nearly a half-million diesel vehicles that helped the cars evade substandard results on emissions tests, the federal government charged Friday. The Environmental Protection Agency issued a notice of violation to the German automaker, saying the company's software broke the law by violating two provisions in the Clean Air Act. Circumventing the standards meant affected cars emitted as much as 40 times the allowable level of certain pollutants. Both the EPA and California Air Resources Board have launched investigations. In its notice of violations, the EPA said Volkswagen officials admitted to installing and concealing what they call a "defeat device," which was designed to detect when the cars were undergoing official emissions tests – and only turn on emissions controls during that time. "Our goal now is to ensure that the affected cars are brought into compliance, to dig more deeply into the extent and implications of Volkswagen's efforts to cheat on clean air rules, and to take appropriate further action," said Richard Corey, executive officer of CARB. The allegations cover approximately 482,000 vehicles sold in the United States over the past seven years. Cars involved include diesel versions of the Jetta, Beetle, Audi A3 and Golf manufactured between the 2009 and 2015 model years. Passats manufactured for the 2014 and 2015 model years are also included. Federal officials note there is no safety danger to motorists, but the cars will be recalled for repairs. If true, Volkswagen faces a fine that could run in the hundreds of millions of dollars -- likely higher than the $300 million charge the EPA levied last November at Hyundai and Kia for exaggerating the fuel-economy in several models. The charges also put a tremendous dent into the company's plans to increase sales of its "Clean Diesel" vehicles in North America. In a written statement, Volkswagen Group of America acknowledged it had received the notices from the EPA and CARB. "VW is cooperating with the investigation; we are unable to comment further at this time," it said. Federal officials said the defeat-device software was uncovered during an independent analysis by researchers at West Virginia University, who in working with the International Council on Clean Transportation, a non-governmental organization, raised questions about emissions levels.

Volkswagen may 'carve out' Lamborghini to list on the stock exchange

FRANKFURT — Volkswagen is drawing up plans to set up Lamborghini as a more independent unit, and is discussing long-term supply deals that could make it easier to list it on the stock exchange, two sources familiar with the matter told Reuters. "Volkswagen is in the process of carving out Lamborghini, and to organize future supply and technology transfer deals," one of the sources familiar with the matter told Reuters. The Italian sportscar brand, which is currently a division of Audi, could be partially listed, with Volkswagen retaining a controlling stake, the first person familiar with the talks said. There is no formal decision to divest Lamborghini, a second source said, adding that the timetable of any deal remained unclear. "This is a first step which gives VW the option to list the unit further down the line," the second source told Reuters. A third source familiar with the discussions said the future of Bugatti, Lamborghini and Ducati was discussed during a supervisory board meeting last Friday. The possibilities for how to electrify the Lamborghini and Bugatti brands through partnerships and investors was discussed, the third source said. Bankers and potential cornerstone investors in an IPO have been approached by the carmaker, the sources said. Volkswagen declined to comment. Volkswagen Group's Chief Executive Herbert Diess on Wednesday said the carmaker will announce "important steps" about the company's future before the close of the year. Volkswagen is reviewing what role its high-performance brands Lamborghini, Bugatti and Ducati will play within the multi-brand carmaker as part of broader quest for more economies of scale, senior executives told Reuters. A global clampdown on combustion-engined vehicles has forced carmakers to accelerate development of low-emission technology for mainstream models, leaving Volkswagen managers struggling to find resources to electrify low volume sportscar models. Related Video:

Mercedes-Benz, Volkswagen, and Audi announce Takata recalls

Daimler, Volkswagen, and Audi will recall nearly 1.7 million total vehicles in the US to replace their Takata airbag inflators. The Japanese parts supplier and the National Highway Traffic Safety Administration announced in late January that several automakers would need to fix around five million more vehicles, and the various companies have been releasing the details since then. Daimler has a recall for 841,000 vehicles in the US, including 705,000 from Mercedes-Benz and 136,000 from the company's van division. Reuters reports the affected models consist of 2005-2014 examples of the SLK-Class, C-Class, E-Class, M-Class, GL-Class, R-Class, and SLS-Class. The vans comprise the 2007-2014 models of the Dodge, Freightliner, and Mercedes Sprinter. Autoblog reached out to Mercedes USA to confirm these details, and we're awaiting a reply. Daimler expects the repair campaign to cost 340 million euros ($382 million at current rates). The company will book the costs as part of its financial year 2015 results, and net profit for that year will fall to 8.7 billion euros ($9.8 billion). Volkswagen's recall covers 680,000 vehicles in the US to replace their driver side airbags. The affected models have Takata's SDI and PSDI-5 inflators, which could rupture in an crash, but the automaker isn't aware of any explosions for these parts in its products. This campaign includes: 2006-2010 Passat Sedan and Wagon (German Production) 2012-2014 Eos 2010-2014 Golf 2010-2014 Jetta SportWagen 2012-2014 Passat (U.S. Production) 2009-2014 CC There are also 170,000 Audi vehicles with the SDI and PSDI-5 inflators in the US, but there are no reports of the parts rupturing in the company's models. The affected products are: 2005-2013 A3 2006-2009 A4 Cabrio 2009-2012 Q5 2010-2011 A5 Cabrio VW and Audi are still working to identify the specific VINs for these vehicles. Afterwards, they will notify affected owners. Ford, Mazda, and Honda already announced details for their new round of Takata repairs. VW and Audi also recalled a small number of Tiguans and Q5s to replace their side airbag inflators from the Japanese company. NHTSA still expects BMW and Saab to detail expanded safety campaigns.