Credit: Alex E. Proimos/Flickr

VW's US chief knew about emissions cheating last year

Volkswagen goes on a sorry offensive in America, but the emissions scandal won't go away that easily.

by Adam Gale
Last Updated: 23 Nov 2015

Wording is ever so important during a corporate scandal. In a prepared statement to be made today before a US House of Representatives select committee, the chief executive of VW’s US business Michael Horn will admit he was aware of ‘possible non-compliance’ in its emissions tests as early as spring 2014, following a study from the University of West Virginia.

‘Non-compliance’ is a compound word to make any German board of supervisors sweat, but what does it actually mean? Horn was also made aware that US agencies could detect ‘defeat devices’ last year, but doesn’t explicitly say this was the non-compliance he'd been told about.

What he thought was causing the discrepancy between Volkswagen cars’ actual and tested emissions (what he surely means by 'non-compliance') is for him to know and a panel of irate American politicians to find out.

Echoing departed group chief executive Martin Winterkorn, Horn will say he ‘didn’t think something like this was possible’ at Volkswagen.

But somebody in the organisation must have known about it. These devices didn’t install themselves into 11 million cars, did they? Questions about blind eyes and rogue elements in the organisation will continue until the numerous investigations into the scandal are concluded. Don’t expect that to be over quickly.

For now, VW has the thankless task of trying get on top of the crisis. After initially making the classic faux-pas of admitting the company had been dishonest during a snazzy product launch party with Lenny Kravitz (such an easy mistake to make), Horn is now reading from the new, lawyer-approved company hymn book.

This features such tried and tested scandal-recovery numbers as offering ‘a sincere apology’, emphasising how the firm is working with the authorities (seven times in three pages, by our count) and reassuring customers that its engineers are ‘working tirelessly’ on remedying the problem (flicking the off-switch on defeat devices, perhaps?).

Horn also threw in a few reasons why patriotic regulators and politicians might want to have a little mercy on a good ‘ol American company like Volkswagen. Aside from building a super-environmentally friendly production plant in Chattanooga, he pointed out, VW had become ‘part of the American culture… and communities across the country’, employing ‘thousands of hardworking men and women’.

You wouldn’t want any of those massive fines you might be considering to hurt them, now would you?

Unfortunately for VW, this just won’t cut the mustard with the regulators, and neither will its response of moving a few board members around. BP employed Americans too, but that didn’t stop it being squeezed for billions as the price of its foul play.

For now, all VW can do is play the contrite sinner and hope it can salvage its reputation, but it won’t like the penance coming its way – on either side of the Atlantic. Watch out for the firm’s annual results early next year to see how much it adds to the €6.5bn (£4.9bn) already set aside for potential misconduct fines.

Investors seem surprisingly optimistic though. VW shares have rebounded by 14% since they reached their low on Friday - but that still leaves them 35% down from mid-September.

VW shares over the last month. Guess when the emissions scandal broke. Source: Bloomberg

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