Volkswagen Faces Possible Sales Ban in South Korea Amid Emissions Scandal
South Korea’s environment ministry is considering revoking certification for 32 Volkswagen Group models, a move that could halt all VW sales in the country this month.
South Korea’s environment ministry is preparing to decide whether to revoke certification for 32 Volkswagen Group models following the company’s diesel emissions scandal. The hearing, scheduled for 22 July 2016, could result in a ban on all new Volkswagen sales in the country if the models’ certifications are cancelled.
The move follows a series of actions by South Korean authorities since Volkswagen admitted to fitting diesel vehicles with software designed to cheat emissions tests. Unlike some other markets, South Korea has taken a strict approach: authorities have fined Volkswagen’s local branch, ordered mass recalls, raided offices and pursued criminal charges against company executives.
If the government revokes certification for the 32 affected models, 27 of which are currently available in South Korea, it would effectively ban all Volkswagen Group cars from being sold in the country. The decision is expected by the end of July, following the hearing. This would be one of the toughest penalties imposed on Volkswagen globally since the emissions scandal broke.
Impact on imported car market and Volkswagen sales
Volkswagen’s reputation and sales in South Korea have already suffered. After years of double-digit growth for imported cars, overall registrations fell 2.6 percent in the first half of 2016, according to the country’s auto importers’ association. Volkswagen’s core brand sales dropped 33 percent to 12,463 units in the same period, while Audi fell 10 percent to 13,058 units.
The scandal’s effect on consumer trust has been clear. The threat of a sales ban adds further uncertainty for Volkswagen dealers, workers and customers in South Korea. Should the ban be enforced, it would leave a gap in the local imported car market and could influence how other countries respond to emissions violations.
For more on regulatory responses to emissions scandals, see Mitsubishi to Offer Compensation After Fuel Economy Scandal.
