For VW, Dieselgate Settlement Seems To Be A Never-Ending Story As New Reports Appear Of The Scandal’s Depth

Like a never-ending story, the Volkswagen diesel emission scandal keeps on going. And, just when you think there’s finally a conclusion and settlement compensation in horizon, it all unravels and starts up again. For example, for the longest time, the assumption has been - among observers - that VW used one piece of code (computer software) to enable its vehicles to pass U.S. emissions standards.

With the proposed VW class action suit settlement working its way toward a final agreement on Oct. 18, many have assumed that, at the very least, one piece of the long-running saga was on its way to a satisfactory conclusion. That perception has been knocked over as it turns out there may have been as many as three pieces of code used by VW engineers to allow one set of the engines involved in Dieselgate – 3.0-liter, V-6 – to pass the U.S. emissions tests. The engine was used in the Audi Q7, Porsche Cayenne and VW Touareg, all crossovers.

Dieselgate Becomes Hot Again
Though it has been quiet for some time this summer, there have been times when it has seemed that almost daily there was a new revelation in Dieselgate that hasn’t made the VW scandal any easier to swallow. For example, one day earlier this year the new came out that the former chief executive of the automaker, Martin Winterkorn, was told about the cheatware used in the carmaker’s vehicles. Then, like a rock crashing through a window, there was the revelation that engineers decided to use the code as early as 2006 because they knew the EA 189 engine wouldn’t pass muster. Rather than try to find the correct fix for the problem, they chose the expedient of cheating. Then came the hint that a small group of engineers made the decision, although repeated investigations have so far not come up with other than the few executives and managers who have either been fired or suspended during the past year.

The latest Dieselgate revelation about the code noted that the computer software rigged the emissions system on 3.0-liter engines made by Audi to run for 20 minutes, or about the length of time that an emissions test runs, letting the mill resume its “normal” operation after 22 minutes. In other words, the emissions system looked for all the world as if it was functioning normally when, in reality, it was only working for the length of the test. Neither the automaker nor the Environmental Protection Agency (EPA) reportedly commented on the latest software report.

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That indicates a level of sophistication in the software that has not been mentioned before. The sophistication is this: to the untrained observer it would look as if the engine was operating normally at all times, even though the emissions system wasn’t running in “clean” mode. It was running in “normal” or “relaxed” mode with emissions control backed off and performance enhanced. The engines in which this software was used was the TDI series, “turbocharged direct injection” powerplants.

The software revelation came during the weekend as Audi managers were set to appear before federal regulators on Aug. 10. It was reported during the weekend that the managers were expecting substantial penalties from regulators.

Dieselgate’s Face Still Uncertain
What makes this piece of Dieselgate so interesting is that it is still very much up in the air. While a part of Dieselgate seems to be on its way to settlement, the class action lawsuit in San Francisco, many threads remain.

For example, some suits have been filed recently by at least four states, including Massachusetts and New York, that have charged the automaker with fraud to consumers. And, there is an ongoing Department of Justice criminal investigation that is still in progress. And the Federal Trade Commission has launched a probe of VW for false advertising in the wake of its “clean diesel” ads earlier this year.

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Then, there are the criminal investigations that are still underway in Germany, France, Italy, India and South Korea. And, then there are the stockholder and financial lawsuits that are still waiting in the wings.

VW Has Far-Ranging Scandal
Dieselgate is far from over, even though it had gone quiet for a time. The latest software revelations only show just how far-ranging the affair was.

So far, VW’s self-inflicted cheating scandal has cost the automaker billions not only in lost sales – diesel sales are still frozen – but also in hits to its reputation. The automaker has also set aside $15.3 billion to buy back 2.0-liter four-cylinder diesel-powered cars which could be low as there are now calls for the buyback formula to be adjusted, so consumers get more for their vehicles by using the retail not the wholesale value of the vehicle. And, officials in Europe are calling for settlements similar to those in the United States for customers in their countries. VW has a long, hard road ahead.