The Week Volkswagen Would Like To Forget

Last week was seen as a possible turning point for Volkswagen. CEO Matthias Mueller would be making his first visit to the U.S. since becoming the CEO and a decision would be reached by the California Air Resources Board (CARB) and the EPA on whether Volkswagen's fix would be enough. What it turned out to be was a comedy of errors.

Muller's Sticks Foot In Mouth During In A Interview

Last Sunday, Muller attended a press event for Volkswagen where he would face the American media for the first time. How would he handle it? Not well.

Speaking with Sonari Glinton of NPR, Muller said the company did not lie to the EPA. It was just a misunderstanding.

Wait, what?!

Here is the exchange between Glinton and Muller:

NPR: You said this was a technical problem, but the American people feel this is not a technical problem, this is an ethical problem that's deep inside the company. How do you change that perception in the U.S.?

Matthias Mueller: Frankly spoken, it was a technical problem. We made a default, we had a ... not the right interpretation of the American law. And we had some targets for our technical engineers, and they solved this problem and reached targets with some software solutions which haven't been compatible to the American law. That is the thing. And the other question you mentioned — it was an ethical problem? I cannot understand why you say that.

NPR: Because Volkswagen, in the U.S., intentionally lied to EPA regulators when they asked them about the problem before it came to light.

Mueller: We didn't lie. We didn't understand the question first. And then we worked since 2014 to solve the problem. And we did it together and it was a default of VW that it needed such a long time.

Trying to think of a logical reason for why Muller would say that is an exercise in futility. What we know for sure is that Volkswagen's PR team was in damage control mode after this interview aired. They asked NPR if it would be possible to do another interview. NPR said yes and talked with Muller.

Muller took some time to clarify some of his statements in this second interview.

NPR: When we talked yesterday, the key line seemed to be that this was a technical error. Which sounds to us in English, like, "Oops." When it wasn't an oops. It was more than a technical error. It seemed to be intentional.

Mueller: Yeah, the situation is, first of all we fully accept the violation. There is no doubt about it. Second, we have to apologize on behalf of Volkswagen for that situation we have created in front of customers, in front of dealers and, of course, to the authorities. ...

NPR: People feel lied to, they feel like they've been had and all those things. There seems to be a difficulty in fixing that problem. How do you fix that problem? ...

Mueller: We have to accept that the problem was not created three months ago. It was created, let me say, 10 years ago. ... We had the wrong reaction when we got information year by year from the EPA and from the [California Air Resources Board]. ... We have to apologize for that, and we'll do our utmost to do things right for the future. ...

CARB Says No To Volkswagen's Proposed Fix

The news only got worse for Volkswagen as the California Air Resources Board announced on Tuesday that it rejected Volkswagen's plan to fix vehicles equipped with the 2.0L TDI four-cylinder. In a letter sent to Volkswagen, CARB said the proposed fix is "incomplete, substantially deficient, and fall far short of meeting the legal requirements to return these vehicles to the claimed certified configuration."

The letter also states that Volkswagen's proposed fix could not be implemented quickly.

In addition, CARB sent a confidential letter explaining in detail why Volkswagen's fix doesn't work.

We don't know what Volkswagen was proposing as a fix. It was assumed that older models with the 2.0L TDI would get a new catalytic converter and new software. Newer models would get the software only.

Indications of Volkswagen's fix not meeting CARB and EPA's expectations appeared earlier this month when the Department of Justice filed a civil suit against the German automaker. In a statement released by the DOJ, Assistant Administrator Cynthia Giles for EPA’s Office of Enforcement and Compliance Assurance said, “So far, recall discussions with the company have not produced an acceptable way forward. These discussions will continue in parallel with the federal court action."

EPA's director of the Office of Transportation and Air Quality Says It Will Be A Long Wait For an Acceptable Fix

Chris Grundler, director of the EPA’s Office of Transportation and Air Quality told an audience at the Automotive News World Congress on Wednesday that it's going to be awhile before a fix is agreed between Volkswagen and EPA/CARB.

“Both ARB and EPA continue to insist on an expeditious fix that will not only bring these vehicles into compliance but also do so in a way that doesn’t create any adverse impacts for owners. We’re not there yet.” said Grundler.

“It’s a serious matter, the deficiencies cover a range of areas. I would not characterize it as dotting i’s or crossing t’s."

Grundler's comments came before a meeting between EPA Administrator Gina McCarthy and Volkswagen CEO Matthias Mueller and brand chief Herbert Diess. The three met to see if a possible deal could be worked out on a possible fix. The two parties couldn't work out a deal, but both said they appreciated the conversation and would continue to talk.

What Happens Next?

Considering how many twists and turns this story has taken since it broke in September, its impossible to figure out where it will go next. What we know for sure is that Volkswagen has a separate February 2nd deadline for a proposed fix on the 3.0L TDI V6.

Aside from this, there a lot of unknowns. Will Volkswagen submit a new proposal in the next few months? What happens to the diesel passenger car? What about Volkswagen's dealers? Will Volkswagen settle with the Department of Justice over the civil suit? Is there a possibility of a buyback program?

One thing is for certain; the pain Volkswagen is feeling will only get worse.