Volkswagen AG (VLKAY) is under pressure from U.S. authorities to buy back some of the diesel vehicles that don’t meet U.S. emissions standards.
California Air Resources Board head Mary Nichols told the German newspaper Handelsblatt in an interview that “I think it’s quite likely they will end up buying back at least some part of the fleet from its current owners.”
Resale values for the affected cars have fallen sharply, leaving both drivers and dealers sitting on some big, if still unrealized, losses. VW has tried to mitigate some of the damage by offering $1,000 in compensation to 120,000 drivers across the U.S.. However, that is likely to be only a first step.
CARB and the Environmental Protection Agency are due to meet with representatives of VW later today to hear its plan for fixing some 482,000 diesel vehicles in the U.S. that use illicit software to understate the true level of their emissions. The cars’ actual emissions level is many times over the legal limit.
VW has indicated that it will retrofit some models’ exhaust systems with new hardware to bring down the level of nitrous oxides emissions to within the legal limit. However, it has argued that some younger cars may only need their software fixing.
The financial damage to the German carmaker still isn’t clear, as it has so far only set aside money (around $7.5 billion) to deal with the actual cost of fixing up to 11 million affected cars worldwide, rather than costs arising from litigation. Its legal risks include suits from investors, who have seen the value of their shares collapse, as well as from drivers who have been the victims of false marketing claims about fuel efficiency and emissions. In addition to its problems with old diesel vehicles, VW has also admitted making false claims about the fuel efficiency another 800,000 newer vehicles, including some of gasoline-powered ones. It estimates that will cost another $2.2 billion to fix.
Reuters reported Thursday that the Department of Justice is also investigating the role of component supplier Robert Bosch & Co., which designed and sold the software used to manipulate vehicles’ emissions data. Bosch, which sells engine control modules and related software to most of the European auto sector, is on record as saying that “how these components are calibrated and integrated into complete vehicle systems is the responsibility of each automaker.” Reuters said Bosch had lobbied Congress to promote advanced diesel technology since 2005.
VW had configured the software so that the car automatically switched into a cleaner mode of operation when being tested in laboratory conditions. On the road, however, it switched back to a higher-emission, higher-performance mode.