Volkswagen Is Ordered to Recall Nearly 500,000 Vehicles Over Emissions Software

[dsm363]

If the fines are closer to $1B then VW Board will see it as the cost of doing business.

If the fines are closer to $18B then the VW Board needs to re budget R&D and CapEX. That will definitely get their attention.

True. $18 billion would make a statement. GM didn't even hit $1 billion in fines for their scandal and that cost the lives of over 100 people. Sad.

 

[RiverBrick]

Whatever the fine is, their accountants will find a way to make a large chunk of it tax-deductible.

 

[ecarfan]

Volkswagen Accused Of Hacking 482,000 Diesels To Fake U.S. Emissions Tests

Until an actual real person is charged with a crime these things will be more likely to happen. Typically a fine is imposed and the company can continue along without any problem.

That is so true. Billions of dollars in fines are just a cost of doing business for VW. The company can absorb it.
There should be an independent outside investigation to determine who in top management approved the software coding deception and those people should be fired with no severance, personally fined, and do jail time. The decisions those people made added more poison to our air, and they knew exactly what they were doing and that it was illegal.
Of course that won't happen because corporate management is never held personally responsible for their actions, they hide behind the legal corporate shield that "The company did it, not me".

 

[tvillars]

Just because one of the emissions is Nitrous Oxide, doesn't mean that the FDA gets involved

What about CARB? Seems to me VW would need to purchase a bunch ZEV credits to offset the extra emissions their diesel cars have been putting out since 2009.

 

[jerjozwik]

It is rumored on appliance enthusiast sites(yeah, I know!) that Bosch has a similar defeat device for laundry and dishwashers to circumvent water efficiency rules.

but! they built my 500e, surely they can do no wrong!

 

[RobStark]

 

[stopcrazypp]

Yeah... we've got a '15 A3 TDI in the garage next to the MS. If the performance drops or it becomes in any way less car than it is today, we'll be looking for them to take it back.

However, I have no idea whether this whole fiasco will extend to Canada as well.

By the time it all gets settled, any buy-back could, and likely would, morph into a Model 3 purchase... for us at least.

- - - Updated - - -


The press release I read said they were safe and entirely re-saleable. It's a (costly) technicality between the manufacturer and government.

Small subtlety there. The cars as they are would not be saleable as new cars as they do not meet federal emissions standards. In fact I believe there was a VW shipment of cars that was held for this reason.

However, the note in the end of the press release says they are safe to drive as a way to distinguish from a safety recall (where sometimes it is recommended for owners to not drive the car as it risks safety to the owner).
http://yosemite.epa.gov/opa/admpres...dfc8e33b5ab162b985257ec40057813b!OpenDocument

 

[ScepticMatt]

Whatever the fine is, their accountants will find a way to make a large chunk of it tax-deductible.

The fine by the government isn't tax deductible, but the cost of fixing their cars and health damage claims are.

§ 1.162-21 Fines and penalties.
(a) In general. No deduction shall be allowed under section 162(a) for any fine or similar penalty paid to—
(1) The government of the United States, a State, a territory or possession of the United States, the District of Columbia, or the Commonwealth of Puerto Rico;
(2) The government of a foreign country; or
(3) A political subdivision of, or corporation or other entity serving as an agency or instrumentality of, any of the above.

Example 7.
S Corp. was found to have violated a law of State Y which prohibited the emission into the air of particulate matter in excess of a limit set forth in a regulation promulgated under that law. The Environmental Quality Hearing Board of State Y assessed a fine of $500 against S Corp. The fine was payable to State Y, and S Corp. paid it. Section 162(f) precludes S Corp. from deducting the $500 fine.

Example 1.
M Corp. was indicted under section 1 of the Sherman Anti-Trust Act (15 U.S.C. 1) for fixing and maintaining prices of certain electrical products. M Corp. was convicted and was fined $50,000. The United States sued M Corp. under section 4A of the Clayton Act (15 U.S.C. 15a) for $100,000, the amount of the actual damages resulting from the price fixing of which M Corp. was convicted. Pursuant to a final judgment entered in the civil action. M Corp. paid the United States $100,000 in damages. Section 162(f) precludes M Corp. from deducting the fine of $50,000 as a trade or business expense. Section 162(f) does not preclude it from deducting the $100,000 paid to the United States as actual damages.

26 CFR 1.162-21 - Fines and penalties. | US Law | LII / Legal Information Institute

 

[Just a Reader]

In the GM case, the NHTSA (US government's safety organization) also was partly to blame. They failed to spot the issue even though they had the data to do so (there was a trend).

However, in this VW case, it is blatant fraud. I am actually in a bit of a disbelief that a company would do something so blatant. And the effects are staggering too (10-40x the NOx in real world conditions vs with the "cheat"). Hyundai and Ford at least had some excuses: Hyundai said they made mistakes on a part of the test procedure, Ford used a loophole and said engineers failed to recognize aero efficiency differences between their sedan and tall hatch. However in this case, this was completely deliberate (can't be explained away by a "mistake").

I should note however that the $18 billion is just an estimate. The actual fine has not been announced yet and may be much lower.

Give me a break. GM's ignition key defect was a lethal defect and it should have been given immediate attention. More than a hundred people died and GM was let off with a slap on the wrist. It's funny how it is mostly foreign companies like BP, BNP, Toyota etc. that get hit by massive fines and bad publicity by puffed up US officials while US companies get an easy ride. Perhaps it's the fault of European and Asian countries to let the US get away with it. For each of these US stunts American companies abroad should be hit in an equal manner. There are plenty of justifications for doing so. Massive misconduct by US financial companies and the blatant violations of data protection and privacy rules by "tech" companies, just for a start.

 

[lucy]

clean diesel

 

[beeeerock]

Small subtlety there. The cars as they are would not be saleable as new cars as they do not meet federal emissions standards. In fact I believe there was a VW shipment of cars that was held for this reason.

However, the note in the end of the press release says they are safe to drive as a way to distinguish from a safety recall (where sometimes it is recommended for owners to not drive the car as it risks safety to the owner).
http://yosemite.epa.gov/opa/admpres...dfc8e33b5ab162b985257ec40057813b!OpenDocument

My post used the word (if it is a real word - LOL) "re-saleable". As in, anyone can trade or sell their used car (appearing on the list of non-compliant models) without penalty. I wasn't talking about new cars on the lot or in transit.

If the recall will be designed to reduce performance in order to improve emissions numbers, it begs the question: "how will owners be forced to have the recall work done?"

I can't say I'd be in a hurry to have the A3 partially crippled...

 

[jgs]

My post used the word (if it is a real word - LOL) "re-saleable". As in, anyone can trade or sell their used car (appearing on the list of non-compliant models) without penalty. I wasn't talking about new cars on the lot or in transit.

If the recall will be designed to reduce performance in order to improve emissions numbers, it begs the question: "how will owners be forced to have the recall work done?"

I can't say I'd be in a hurry to have the A3 partially crippled...

An interesting point and one that speaks in favor of penalties on the higher end of the spectrum, since the defect affects public health, and per your argument, the harm is unlikely to be appreciably mitigated.

 

[SW2Fiddler]

BTW if this is getting picked up by the media during the next days this could get a lot of press attention.

It's funny how it is mostly foreign companies like BP, BNP, Toyota etc. that get hit by massive fines and bad publicity by puffed up US officials while US companies get an easy ride.

Hahaha, this news was "dumped" on a Friday afternoon. Best way to minimize US visibility. (All Football, All Weekend! Interspersed with CAR ADS!)
Someone has done VW a HUUUGE favor public-image-wise.

 

[Chickenlittle]

My post used the word (if it is a real word - LOL) "re-saleable". As in, anyone can trade or sell their used car (appearing on the list of non-compliant models) without penalty. I wasn't talking about new cars on the lot or in transit.

If the recall will be designed to reduce performance in order to improve emissions numbers, it begs the question: "how will owners be forced to have the recall work done?"

I can't say I'd be in a hurry to have the A3 partially crippled...

I suspect that vow will be forced to buy back the autos. The recall will lower the power output and hence fraudulent sales

 

[snellenr]

An effective way to get the manufacturers' attention would be to suspend sales of those models (by dealers; used market is probably out of their reach) until all of the affected cars have been serviced. Also, "flush out" any other cases by allowing any manufacturers who *voluntarily* report similar behavior to continue to selling their equivalent models (repaired, of course) after paying their fine and starting their own recall program.

 

[nwdiver]

This is going to be HUGE.... I'm not sure there's precedent for this. This was INTENTIONAL... there have been occasions where an engineering failure was 'covered-up' but the failure was usually accidental. Going to be interesting to see where this goes... would VW be willing to pay $18B to stay in the US market?

Someone needs to go to prison for this....

 

[stopcrazypp]

My post used the word (if it is a real word - LOL) "re-saleable". As in, anyone can trade or sell their used car (appearing on the list of non-compliant models) without penalty. I wasn't talking about new cars on the lot or in transit.

If the recall will be designed to reduce performance in order to improve emissions numbers, it begs the question: "how will owners be forced to have the recall work done?"

I can't say I'd be in a hurry to have the A3 partially crippled...

I know you used re-saleable. However, Johan asked "Please enlighten me: the way these cars actually are, does it render them illegal or should they just have been labeled and perhaps taxed differently?"

I think it should be pointed it is illegal to sell as a new vehicle (Johan did not specify new or used) and it's not simply a matter of relabeling/taxing differently.

As for enforcement. In California (and 12 other CARB states), the DMV will refuse to renew your registration unless all emissions related recalls proven to be performed.
That means your car will effectively only be legal to drive until your next registration date after which it becomes illegal to drive.

Fix link:
10.065 Emission Recall Program (HSC §43009.5)

List of CARB states:
http://www.ngvamerica.org/government-policy/state-matters/

 

[Johan]

I know you used re-saleable. However, Johan asked "Please enlighten me: the way these cars actually are, does it render them illegal or should they just have been labeled and perhaps taxed differently?"

I think it should be pointed it is illegal to sell as a new vehicle (Johan did not specify new or used) and it's not simply a matter of relabeling/taxing differently.

As for enforcement. In California (and 12 other CARB states), the DMV will refuse to renew your registration unless all emissions related recalls proven to be performed.
That means your car will effectively only be legal to drive until your next registration date after which it becomes illegal to drive.
https://www.dmv.ca.gov/portal/dmv/?...dmv_content_en/dmv/pubs/reg_hdbk/ch10/ch10_14

List of CARB states:
http://www.ngvamerica.org/government-policy/state-matters/

Thanks. This was what I was getting at. Economically that's a HUGE value loss for the owners of these cars.

 

[gene]

Thanks. This was what I was getting at. Economically that's a HUGE value loss for the owners of these cars.

Exactly. I bought a 2010 Jetta TDI and I am furious about this. It's hard to buy my son at 20 years old, a Model S. I refuse to buy anymore ICE. Yet for him, 90 miles range will not work. Hopefully by the time his Jetta is crushed, bought back, or whatever, the Leaf 2, Bolt, or Model 3 will be available.

I considered an eGolf for my wife, but I'm so pissed off. No way, not another VW.

 

[stopcrazypp]

Thanks. This was what I was getting at. Economically that's a HUGE value loss for the owners of these cars.

I should point out that however, after VW recalls the car then it will likely be legal to drive. It's not that hard to fix, as the issue is mainly with the software. The main effect on resale value is that the performance/fuel efficiency may be reduced and some of the emissions related parts may wear out faster than VW has indicated (there is speculation the main reason VW cheated is because there are parts that would wear out before the warranty expires if they didn't cheat).