Did emissions violations just kill an OEM’s North American dreams?

[kscarbel2]

Commercial Carrier Journal (CCJ) / September 22, 2015

Volkswagen shares tumbled Monday morning on the heels of news last week that the U.S. Environmental Protection Agency’s announcement that it was initiating a class-action lawsuit against the German automobile manufacturer.

The suit alleges that Volkswagen TDI diesel cars sold in in North America were equipped with emissions “defeat code” software: If the car’s Electronic Control Module detected a hook-up to an emissions testing device, it would adjust its emissions control system to conform to existing emissions regulations. Once the system was disconnected, the cars would revert to emissions performance not in compliance with EPA regulations — the car’s default operating mode.

Defeat software is nothing new in trucking. Flash back to 1999 when several truck OEMs were busted by the EPA for the same offense: Coding engine software to detect test devices and boost emissions performance while in test mode.

Ironically, one engine manufacturer — Navistar — was found to be in complete compliance with the regulations then in place. Indeed, the EPA found that Navistar was actually ahead of the game and already exceeding the threshold set for coming emissions regulation rules. As a result, Navistar began receiving EPA emissions credits as a reward for being a good-faith player and company officials apparently decided their emissions technology path was infallible; two developments that would have unforeseen — and profound – consequences a decade later.

This is not welcome news at all for VW, should these allegations be proven. If that’s the case, the company is looking at a scandal that affected more than 10 million cars, according to the latest reports, and the in-house costs of repairing those vehicles will be tremendous. On top of that, the EPA could slap them with an $18 billion fine.

The long-term repercussions of this story could send shockwaves across the global automotive pond that could eventually lap up on the shores of the heavy-duty truck market.

As I’ve noted before, VW is on record saying that its goal was to surpass Toyota and become the No. 1 automobile manufacturer in the world by 2020. Making a move into the North American truck market was widely seen as a vital step in that process. And the industry buzz for years now has been: Is Volkswagen coming? Will they try to buy a North American Truck OEM? If so, which one?

If the allegations prove to be true, then it’s reasonable to think that any North American trucking dreams VW has will have to be put on hold — perhaps indefinitely. Any scenario for VW coming into the U.S. truck market is wholly dependent on the company’s access to huge cash reserves. Obviously, VW may soon have to spend that money on cleaning up this alleged emissions mess and paying massive EPA fines.

Looking into the crystal ball, it’s tough to see how this will play out in the long run. One the one hand, if you’re a fan of American-owned truck companies, it appears the last two men standing, Paccar and Navistar, will remain so for the near future. On the other hand, Volkswagen’s vast global resources and access to the latest European safety and powertrain technology could have dramatically altered the competitive marketplace in North American trucking today.

Who knows what will happen next? Perhaps VW will be able to explain these allegations away, or cut a deal that saves them some cash and keeps their American trucking dreams alive.

But above all else, this scandal proves two things: One, that getting cute with emissions systems and stealth software is a bad idea. And second, that in the hyper-connected world of automotive and truck manufacturing, a bad decision in one business unit can have devastating consequences in markets and countries far, far away.

[kscarbel2]

Volkswagen Scandal Harkens Back to Truck Engine Makers’ 1998 Battle With EPA

Transport Topics / September 22. 2015

The U.S. Environmental Protection Agency said Volkswagen cheated on air-pollution rules for its diesel cars with a defeat device, reminiscent of 1998 when heavy-duty truck manufacturers were doing the same thing.

Seventeen years ago, EPA said engine manufacturers were designing their engines’ computers specifically to circumvent federal standards.

With the software, the engine would run cleanly for the five minutes it would take for an emissions test but begin emitting illegal levels of nitrogen oxide soon after.

“So basically what happens is the computer system senses the timing and other things like speed and temperature, so that as long as you’re under conditions similar to the federal test procedure you’re fine, but otherwise NOx doubles or triples,” Margo Oge, director of EPA’s Office of Mobile Sources, said at the time.

Caterpillar Inc., Cummins Engine Co., Detroit Diesel Corp., Mack Trucks, Navistar International Transportation Corp. and Volvo Truck Corp. negotiated a consent decree with the EPA and the Department of Justice to settle the allegations.

The way EPA acted in the matter “borders on a crime,” Stephen Homcha, vice president of engineering and product planning for Mack, told Transport Topics at the time.

“They held a gun to our head by threatening to withhold certification for 1999,” Homcha said.

“I’m a manufacturer who feels he’s been treated unfairly,” he added. “Looking at the level of penalties against a regulation and a test procedure that was very much set by EPA, it appears that the actions and the settlements were very severe on the engine manufacturers.”

The six major engine manufacturers accused of cheating on engine emissions tests ended up settling for $1.3 billion with the federal government.

Volkswagen AG has admitted that 11 million vehicles were equipped with diesel engines at the center of a widening scandal over faked pollution controls that will cost the company at least $7.3 billion, Bloomberg News reported.

“Our company was dishonest with the EPA and the California Air Resources Board and with all of you,” Michael Horn, head of the VW brand in the United States, said Sept. 21 in Brooklyn, New York, where he was revealing a redesigned version of the Passat. “We have totally screwed up. We must fix the cars to prevent this from ever happening again, and we have to make this right. This kind of behavior is totally inconsistent with our qualities."

[41chevy]

So basically VW has to admit fault or else the US EPA will with hold certification aVW will lose North America sales followed by the EU EPA doing the same with their certification. End result is VW destroyed as a company. Wonder why the EPA doesn't go after GM or Chrysler. . . government turn a blind eye to their pets?

[RowdyRebel]

Hell, this ALMOST makes me want to go out and buy one of these VW's. This country was founded upon a resistance to intrusive government oversight and burdensome rules and regulations imposed by an unelected and unaccountable government. What VW did by creatively finding a work-around in order to satisfy the bureaucrats while at the same time maintain the ability to offer a vehicle with the performance characteristics their customers desired is to be commended! If their vehicles had strictly followed the mandates, they wouldn't have sold...so they did what they had to do given the BS handed to them by the unelected, unaccountable bureaucratic agencies.

[41chevy]

Bottom line is it is all Bull Sh*t to get money in fines and to please a far left environmental group whom started this entire debacle. Like Navistar who used EPA designed and suggested emissions technology and got punished for it or the non existing bio additive the EPA requires in fuel that the EPA fines refiners for not using! Seems the Administrations agenda is punish any and all technology that is fossil fuel based. (Think COAL)

[Jnicol6600]

Makes Me sick to see what the epa can do with little to no oversight

[Marcel67]

EPA = Extreemly Pathetic Agency!

[41chevy]

Think the VW thing is bad? Wait until the WOTUS regulations kick in early 2016. The Waters Of The United States EPA regulations govern all waters that eventually end up in the oceans, either by direct path or via under ground aquifers. Know that little damp spot on your yard after a rain? Comes under WOTUS regs which will restrict use of all land around it. Course it also gives the Federal Government control of all waters in the US. Paul