German automaker Volkswagen AG, the (interim) world’s largest carmaker is in a tight spot when it comes to its troubled namesake brand, which has been performing poorly in the United States for some time now.
The brand itself has started performing poorly on a global level as well recently – mostly because of its Chinese woes – and has received another blow after an organization found the company was breaching US environmental rules when it came to its diesel engines. Last week VW AG was prompted it could be fined up to $18 billion because it allegedly designed software for its diesel vehicles that purposely mislead regulators when they tested the autos to measure their emissions, according to the US Environmental Protection Agency. “Put simply, these cars contained software that turns off emissions controls when driving normally and turns them on when the car is undergoing an emissions test,” claimed on Friday an enforcement officer at the EPA. The brand could be fined up to $37,500 in civil penalties for every auto that falls to comply with the federal clean air law – with 482,000 four-cylinder VW and Audi diesel cars delivered since 2008 and involved in the mishap.
VW AG reacted promptly and announced through its chief executive officer Martin Winterkorn on Sunday an external audit has been commissioned, with the executive stating he was “deeply sorry” for the breach of US regulations. “I personally am deeply sorry that we have broken the trust of our customers and the public,” he commented in a published statement. While Audi was doing very well on the US market – and the bad publicity is less likely to impact the luxury brand – the mass-market brand Volkswagen was heavily reliant on its diesel powered cars to try and turn the tide on its negative performance in the States. And the issue could be another thorn in the CEO’s back, which has already been allegedly confronted by the former chairman Ferdinand Piech particularly for the defective strategy employed in the US.