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Volkswagen and Dieselgate; one year later

Where do we go from here? By ,

One year ago, the automotive industry and particularly Volkswagen AG was shaken. The enormous conglomerate that is VW was found to have manipulated emissions on their famous TDI-powered cars. The result of various tests determined that the average Jetta, Golf or Passat equipped with a 2.0L turbo-diesel mill actually polluted between 5 and 35 times more than advertised. 

In a nutshell, a cheat box was installed on these cars to detect when they were being tested for emissions. While in this mode, the box essentially cleaned up its act. However, when unplugged and being driven normally by owners, emissions were far greater. Following this discovery, investigations into past TDI vehicles revealed that the false readings were not limited to late-model year cars. This prompted the inability for VW to sell 2016 model-year TDI vehicles because they could not be certified. The automaker also launched numerous recall campaigns and lost many billions of dollars. 

In the early stages of what became known as “Dieselgate,” a number of car manufacturers were evaluated as well in the name of finding out if anyone else was playing this game. Volvo, Renault, Jeep, Hyundai, Citroën, and Fiat were found to be not so clean with their ratings. 

It’s bigger than initially thought
As the weeks and months passed, it was discovered that the issue was not limited to 2.0L TDI engines, but that it also involved V6 TDI engines sold in Audi and Porsche models (and the Volkswagen Touareg), not to mention 1.2L and 1.6L engines. 

Ultimately, more than 11 million cars and utility vehicles were affected by the emissions violations. Of course, with numbers this great, the scandal was not limited to North America. Other than the aforementioned brands, SEAT, Skoda, and several of Volkswagen AG’s light commercial vehicles were also targeted. 

The many billions set aside to address the matter suddenly did not seem to be enough. In the last year, Canadian and American owners of affected vehicles covering the 2009-2015 model years have received communications as well as vouchers, or free maintenance up to a certain amount. Earlier in 2016, it was announced that U.S. owners of marked cars would receive substantial compensation as well as buyback offers from VW. Canadians are still waiting to find out what they will get; however, it seems clear that no compensation will be offered in Europe. 

The calculations to determine said compensation are extremely complex and do not merit an explanation here. Volkswagen of America has set up a website that will inform you of the amount you are entitled to. 

As the investigation progressed, we learned that Bosch was allegedly instrumental in creating the software that enabled the cars to cut their emissions while being tested. As well, and most experts in the field agreed, many VW engineers were involved in the scandal from the onset, and it appears that at least one has agreed to come forward and spill the beans. 

More, we’re certain, is yet to come. 

The case against Volkswagen
Where the U.S. and other countries want to hit VW is on the “extra” pollution that was created by these cars and their effect on us, the consumers. Verified and unverified researches say that between 10 and 350 people will die as a direct result of the emissions wrought on the unsuspecting population. 

We must remember that Volkswagen did receive numerous tax breaks and awards for its so-called Clean Diesel Technology. Essentially, the U.S. government, in particular, was lied to, and it doesn’t take kindly to liars. This has actually turned into a criminal case against the carmaker. 

The current aftermath
Many TDI owners are understandably infuriated with VW. Former Volkswagen Group CEO Martin Winterkorn was quick to recognize that trust between the company and its customers had been breached. The conglomerate’s suffered important stock value losses, and many consumer groups and organizations are currently working to sue Volkswagen for damages. 

Volkswagen has until June 30th, 2019 to correct 85% of affected TDI vehicles, otherwise they will face more fines. Little is known about the effects on the car once fixed, although some sources indicate that fuel economy may drop by 5%-10%. Depending on where the information comes from, acceleration times may increase by up to 10%. These numbers should serve as a guideline to describe the potential effect the emission remedies will have on the TDI cars. 

As for the company, Volkswagen Canada’s year-to-date sales have declined to 37,397 from 43,592 in 2015 (roughly 15%). The drop is much the same in the U.S., but on a much larger scale. South American sales took the hardest hit with a nearly 30% decrease. Globally, however, VW car sales are down less than 1%, which could be indicative of not only strong markets such as China, but also that the actual impact of Dieselgate, even in affected countries, is nowhere near as important.  

Volkswagen is working hard on getting its large foot out of its even larger butt. Outspoken Tesla CEO Elon Musk was asked his opinion on the matter, and he responded by saying that this proves we have reached the limits of what can be done with diesel and gasoline engines. 

While many would argue that this is not the case, this will force VW to re-evaluate and re-align its focus. They now plan to accelerate the development of hybrid and electric cars. Volkswagen has furthermore made it clear that the diesel initiative in North America is over. This creates an interesting situation for those who will decide to keep their TDIs. Despite the scandal, they are likely to be sought after on the used car market and may actually increase in value over time.

What are the options?
Beyond the disputes with suppliers and issues with assembly plants, if you chose to remain loyal to the brand, Volkswagen has a few powertrain options that might suit your needs. 

The current TSI engines are quite efficient and have replaced older (in some cases, much older), less economical mills. The turbocharged 1.4L and 1.8L 4-cylinder engines provide ample loads of power, including torque, and return impressive fuel mileage numbers. Volkswagen has had a highly efficient Jetta Turbo Hybrid in the lineup for a few years, but its $37,000 price tag has sent nearly all hybrid enthusiasts in Toyota’s or Hyundai’s direction.

On top of that, Volkswagen is, and was, already working on a special electrified platform capable of handling both electric and plug-in hybrid powertrains, much like the majority of large automotive companies. One existing example is the e-Golf. In the U.S., Volkswagen of America has made it available in some markets for a while. As for Canada, those in the know are working hard on making the car a reality sooner rather than later. 

VW has announced that over 30 new electrified models are expected to launch by 2025 across their entire spectrum of brands. A number of them have been revealed already, but the most promising will be shown to the world at the upcoming Paris Auto Show. The press days will take place at the end of September, and sources predict that VW’s concept will be a clear indication of what’s to come next for Canada and the U.S. 

The wall is very thick
Volkswagen is not done with “hitting the wall.” Lawsuits continue to sprout up from consumer groups, dealerships, suppliers, and others. Additional countries intend to sue VW for countless more billions. In other words, even one year after the scandal broke out, it is far from over. 

As a Canadian customer, you’re likely to have received and used the aforementioned vouchers. The next 4-6 months will be very telling; we expect further details on settlements and future products.

 

Photo: Volkswagen