VW emissions scandal set to overshadow Detroit Motor Show

VW Scandal

On Sunday night, as Detroit fills with auto journalists and car executives, Volkswagen will hold a media party at Fishbone’s, the Cajun-themed restaurant in the city’s Greektown neighbourhood. It’ll be the opening salvo in a PR offensive the German company will be hoping can finally turn the tide after arguably the worst year in its history, reports The Guardian.

Three months after the revelation that Volkswagen Group was using an illegal software fix called a “defeat device” to circumvent US environmental regulations on about 600,000 of its diesel-powered passenger cars, the company will showcase its new vehicles at the US’s largest car show on Monday.

The unveiling, however, is sure to be overshadowed by news that the Department of Justice has filed a lawsuit on behalf of the Environmental Protection Agency (EPA) that could result in about $48bn in fines and penalties.

The defeat device has been seen by federal and international regulators and many consumers as an egregious flouting of environmental protection laws. The justice department said in a statement last Monday that the vehicles – certain Volkswagen, Audi and Porsche models equipped with 2- and 3-litre diesel engines – had emitted as much as 40 times the accepted level of oxides of nitrogen (NOx) into the atmosphere.

“With today’s filing, we take an important step to protect public health by seeking to hold Volkswagen accountable for any unlawful air pollution,” Cynthia Giles, a administrator with the EPA’s office of enforcement and compliance assurance, said in the statement.

Dieselgate, as it’s become known, has affected about 11m vehicles worldwide. The scandal prompted yet another apology from Volkswagen, this time from Dr Herbert Diess, Volkswagen’s chief executive of passenger vehicles, who addressed a crowd at the Consumer Electronics Show in Las Vegas this week.

Although the department has also been investigating VW executives over criminal fraud allegations, no charges have been filed. Martin Winterkorn, who had been chief executive of Volkswagen Group since 2007, resigned several days after news of the scandal broke but denied any personal involvement in the cheat.

New CEO Matthias Müeller will be in Washington on Wednesday, when the press days at Detroit have wrapped up, for a grilling by the EPA.

Moving beyond the scandal is imperative for VW. Sales have dropped 4% this year, with a 9% decrease in December alone, according to figures provided by Kelley Blue Book.

“The diesel scandal has affected VW about how we expected,” Akshay Anand, an analyst for Kelley Blue Book, said. “Sales are down, but they haven’t killed the company. Transaction prices are down a bit, too, but they’re not overwhelming.”

Anand said VW was planning a big product release at the end of 2016 and suggested that the company should be more proactive about resolving potential recalls on existing vehicles.

“If they don’t have it figured out by then, it may affect sales,” Anand said. “That’s still a ways off though, so there’s time for VW to right the ship.”