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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 building budget car family planned for China in 2018

Volkswagen has publicly pondered a low-cost car for China, something akin to Nissan's Datsun revival in Southeast Asia, for at least three years. In 2013 it tapped Chinese partner FAW to help develop an entire budget brand, with plans to have something on the market in 2016 in the 6,000- to 8,000-euro range. About a year ago, VW said it couldn't figure out how to engineer an inexpensive car that didn't run counter to the brand's values, then three weeks later said it had overcome the issues. Reuters now reports that VW CEO Martin Winterkorn told German newspaper Bild am Sonntag, "We will bring a budget-car family to market in 2018, with an SUV, saloon and hatchback." Winterkorn didn't offer any other details like who VW would work with to build it - VW has partnerships with both FAW and SAIC, but the announcement will be welcomed by the brand's Chinese outpost. When this adventure started, VW said it was working to create a model that would cost 6,000 to 8,000 euro. That estimate has increased. Winterkorn is now saying the 2018 offerings will come in between 8,000 and 11,000 euro. In a straight euro-to-yuan conversion, that would equate to Chinese pricing of 56,000 to 77,000 yuan. For comparison, the New Polo with a 1.4-liter engine and a manual transmission starts at 85,900 yuan. Perhaps with an eye on the success of the Nissan-Renault sub-brand Dacia in Europe and emerging markets, Winterkorn told Bild, "We will see if this is something of interest for other markets as well." On the opposite end of the price/performance spectrum, Winterkorn also said that VW is working on two new models for Bugatti, one powered by a traditional gasoline engine and another with some sort of hybrid setup. The latter model would reportedly be the higher-performing of the two, though it's not clear whether there would be two vehicle lines or two versions of the same vehicle. As ever, as soon as we know more, so will you.

Volkswagen forced to sell stake in Suzuki

The six-year-long failed marriage between Volkswagen and Suzuki has finally come to an end. Almost. An arbitration panel in London issued its final verdict which, according to a VW press release, cleared Suzuki in terminating the agreement, so VW now needs to get rid of its 19.9-percent share. However, the tribunal's decision said VW performed all of its obligations and Suzuki didn't – the Japanese carmaker should have given VW last-call rights for a delivery of diesel engines, but failed to. The breach opens Suzuki up to damage claim, but so far VW only says it reserves the right to sue. Now that Suzuki has an outside investor to provide funds it meant to get from VW, perhaps both can get back to their reasons for being. The press release is below. Ruling in arbitration proceedings: Cooperation between Volkswagen and Suzuki deemed terminated - Arbitral tribunal confirms Volkswagen met contractual obligations and finds that Suzuki has ordinary right to terminate agreement based on reasonable notice - Volkswagen to dispose of its 19.9 percent stake in Suzuki and expects positive effect on Company's earnings and liquidity from transaction - Arbitrators also find that Suzuki breached its contractual obligations to Volkswagen under the agreement and that Volkswagen has right to claim damages Wolfsburg, 30 August 2015 - An arbitral tribunal in London has announced its ruling in the dispute between Suzuki Motor Corporation and Volkswagen Aktiengesellschaft. As a result, cooperation between the two parties is deemed terminated. The arbitrators confirmed that Volkswagen met its contractual obligations under the cooperation agreement and found that Suzuki has terminated the agreement upon reasonable notice. Volkswagen will therefore now dispose of its 19.9 percent stake in Suzuki and expects a positive effect on the Company's earnings and liquidity from the transaction. The arbitral tribunal also confirmed that Suzuki breached its contractual obligations to Volkswagen under the agreement and that Volkswagen has the right to claim damages. "We welcome the clarity created by this ruling. The tribunal rejected Suzuki's claims of breach and found that Volkswagen met its contractual obligations under the cooperation agreement. Nevertheless, the arbitrators found that termination of the cooperation agreement by Suzuki on reasonable notice was valid, and that Volkswagen must dispose of the shares purchased.