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Scandal hits VW sales

Posted on 30 November, 2015

The Volkswagen Group is dealing with a slowdown in orders for new cars in the wake of admitting it understated fuel usage and carbon dioxide emissions. “There is caution in buying,” says Bernd Osterloh, the company’s works council chief. “The CO2 issue has triggered a greater crisis of confidence than the nitrogen [oxide emissions] issue.” VW said on November 3 that it had understated the level of CO2 emissions in about 800,000 cars sold mainly in Europe. The automaker expects costs of at least two billion euros, including compensation payments to customers, as a result of the inaccurate data. Two weeks later, the company said the CO2 scandal, which mainly involved diesel cars, affected more petrol-powered vehicles than previously disclosed. VW’s revelations about providing erroneous fuel economy and CO2 emissions have deepened the crisis that initially centered on manipulated software used in up to 11 million diesel vehicles worldwide. It admitted in September that it had understated actual emissions of the pollutant nitrogen oxide in those vehicles. The VW Group is facing a separate crisis in the US after the company informed authorities last week that about 85,000 vehicles with three-litre V6 diesel engines were fitted with emissions-control equipment that was not disclosed to regulators. Global sales of VW group vehicles dropped by 3.5 per cent in October, although they nudged up by 0.5 per cent in Germany.

Group identifies massive savings

The Volkswagen Group has identified about 1.9 billion euros in savings at its namesake car brand to help offset fines and recalls stemming from fiddling vehicle emissions. It plans to eliminate some variants and trim options to reduce complexity and cost, says Osterloh. And the company’s senior executives are expected to participate in the broader savings effort with lower bonuses. “We from the works council have long flagged the huge range of model variants and different components,” says Osterloh. “That brings enormous complexity and adds to costs, for example, for logistics. We can take out costs there on a large scale and don't have to talk about job cuts.”

Newspaper contradicts lack of knowledge

Volkswagen’s top executives knew a year ago that some of its cars were markedly less fuel efficient than officially stated, German newspaper Bild am Sonntag reported, without specifying sources. VW revealed in early November it had understated the level of CO2 emissions and fuel usage in about 800,000 cars sold mainly in Europe. The scandal initially centered on defeat devices installed in up to 11 million diesel vehicles worldwide it admitted were designed to artificially suppress nitrogen-oxide emissions in a test setting. But the newspaper contradicts VW’s assertion that it only uncovered the false CO2 emissions labelling as part of efforts to clear up the scandal, which became public in September. A VW spokesman declined to comment on whether the company had knowledge already a year ago of overstated fuel efficiency.