Cheating scandal could hit SA VWs
Was CO2 tax underdeclared?
VOLKSWAGEN in South Africa is to be investigated by the National Regulator for Compulsory Specifications (NRCS) and the departments of Environmental Affairs and Transport as the emissions scandal continues to affect the company’s global operation.
The NRCS has not ruled out a recall of affected vehicles.
This week, the regulator said: “With regard to the latest allegations of rigging of emissions tests made by the US Environment Protection Agency against VW cars in the US and Europe, NRCS will launch an investigation working together with the departments of Environmental Affairs and Transport to determine whether the South African vehicles are also affected.”
It would do a study comparing the models implicated with vehicles approved in South Africa to determine whether there had been any manipulation of pollution data.
“This will be followed by sampling and testing of emissions requirements against the relevant South African standard. If vehicles are found to be non-compliant, the NRCS will apply a sanctioning process which will lead to recall of the relevant vehicles.”
VW SA spokesman Matt Genrich directed questions to the German head office, which did not answer. The company was “working at full speed to clarify the irregularities concerning particular software used in diesel engines”.
VOLKSWAGEN (VW) South Africa may face a possible investigation by the SA Revenue Services (Sars) for the underdeclaration of carbon dioxide (CO2) taxes on vehicles sold in the country.
The price of any VW vehicle sold in South Africa on which there was any under declaration of CO2 taxes, if any, would also have to increase to take account of the actual CO2 emissions by these vehicles.
Luther Lebelo, a spokesman for Sars, stressed this week that in line with the provisions of the Tax Administration Act, Sars did not divulge specific information relating to the tax affairs of any taxpayer.
Lebelo was responding to a Business Report request for comment on whether Sars had or was considering launching an investigation to determine if there was any underpayment of taxes to Sars as a result of VW’s admitted cheating in diesel vehicle emissions tests in the US.
Deceived
The US Environmental Protection Agency (EPA) said last week that VW had used software that deceived regulators measuring toxic emissions and could face penalties of up to $18 billion (R247.24bn).
Lebelo said Sars’ enforcement actions were informed and prioritised in accordance with a proper risk evaluation methodology, and should a material risk be detected in respect of any of the laws administered by Sars, then enforcement would follow.
“Sars can assure the South African public that any prima facie case of possible tax avoidance or non-compliance brought before it, either
Some manufacturers and importers make the tax visible to motorists when they buy a vehicle.
through the risk engine or fraud line, will be dealt with accordingly,” he said.
Duane Newman, a director of Cova, a tax and government incentive advisory services company, agreed that if there was an under-declaration by VW of CO2 emissions by the vehicles it sold in South Africa, the company could potentially be liable to pay a fine to Sars and any amounts underpaid as a result of this potential underdeclaration.
Newman said South Africa’s emission taxes were paid based on a self declaration system by the various motor companies.
“If a company had been incorrectly declaring the CO2 levels of some of their vehicles, they could have underpaid a portion of their CO2 tax and Sars could potentially have a claim,” he said.
Newman added that the vehicle importer or manufacturer was responsible for paying the emissions tax over to Sars, but had the choice of building it into the price or not doing so. “Some manufacturers and importers make the tax visible to motorists when they buy a vehicle,” he said.
VW said earlier this week that it was working at full speed to clarify irregularities concerning a particular software used in its diesel engines.
The company stressed the discrepancies related to vehicles with Type EA 189 engines, involving 11 million vehicles worldwide, and it planned to recognise a provision of € 6.5bn (R99.5bn) in its profit and loss statement in the third quarter of its current financial year.
VW sells more than 40 VW models and almost 30 Audi models with diesel engines in South Africa.
The CO2 emissions tax on new light vehicles was introduced by the Treasury from September 1, 2010, which increased the price of new cars by about 2 percent.
THE REVELATION that ended Martin Winterkorn’s career at Volkswagen came on September 3 in a meeting at an office park east of Los Angeles. After months of obfuscation, company engineers finally divulged a secret to engineers at the California Environmental Protection Agency’s (EPA) Air Resources Board: Volkswagen had installed a “defeat device” to cheat on vehicle emissions tests – and then lied about it to the board and the US EPA for more than a year.
On September 23, Europe’s largest automaker announced that Winterkorn, its 68-year-old chief executive, had resigned. While the company exonerated him of involvement in the manipulations, it said it would conduct an internal investigation and has asked local German prosecutors to assist and open a criminal probe.
The unravelling began in 2013. European regulators, concerned about diesel pollution there, wanted to test emissions on vehicles sold in the US under actual driving conditions. The results were expected to show real-world emissions were closer to lab performance in America than in Europe. But they weren’t. That prompted investigations in California that ultimately involved 25 technicians working almost full time. They discovered the software Volkswagen used to circumvent airpollution regulations in at least 11 million cars.
“This is going to become a very, very serious problem for Volkswagen and any other companies that may have had such practices,” said Donald W Lyons, who founded the Center for Alternative Fuels, Engines and Emissions at West Virginia University.
The nonprofit International Council on Clean Transportation, with offices in Washington, Berlin and San Francisco, got the emissions-testing contract from European regulators. It then hired researchers at the Morgantown, West Virginia, centre in early 2013. The centre, which has studied engine emissions and use of alternative fuels since 1989, was going to evaluate three diesel passenger cars, including a Volkswagen Passat and Jetta.
Not interested
“We never went into it saying,‘we’re going to catch a manufacturer’,” said Arvind Thiruvengadam, a research assistant professor at the center. “We were totally looking and hoping to see something different.”
The researchers first contacted Volkswagen and other manufacturers to help get vehicles and inform them about the tests, said Daniel Carder, director of the centre. The companies weren’t interested in participating, so the centre rented a privately owned Passat and Jetta in Los Angeles and a BMW X5 from an agency in San Jose for testing from March to May in 2013, Thiruvengadam said.
Using portable measuring equipment with hoses attached to vehicle exhaust pipes, researchers drove the Jetta and BMW through Los Angeles and took the Passat to Seattle and back. They also worked with the California Air Resources Board’s laboratory in El Monte, which tested the cars on a dynamometer, a device that measures engine performance.
When the Volkswagen cars were in the lab, they met the Clean Air Act standards. In the real world, they were belching out oxides of nitrogen at much higher levels than allowed. “There was a lot of texting and e-mailing back and forth,” among the two groups: ‘Whoa, things aren’t looking good here’,” Carder said.
In May 2014, the West Virginia centre published the results of its study, prompting the California board to start an investigation. The board’s technical staff spent months meeting with Volkswagen engi- neers about the alarming discrepancies. In December, Volkswagen voluntarily recalled about 500 000 cars, saying this would take care of the problem. When the Air Re- sources Board ran tests to confirm the fix, little had changed.
Staff at the board kept pressing Volkswagen for answers; the company said they must have run the tests wrong or their instruments weren’t calibrated correctly. Puzzled and perplexed, the technicians went back to the lab and the road, double checking and re-running everything.
Anomalies
But the results were the same. Over the summer Volkswagen revealed how its TDI engine operated and how its pollution controls worked, but that still didn’t explain the strange anomalies. “We had 10 meetings with VW,” Stanley Young, a spokesperson for the board, said in an interview at the El Monte lab. “Time and again they refused to tell us what was going on.”
Some two dozen board staffers were working almost full-time on the VW problem. Mystified as to how the results could be so different, they began digging into the data stored on the cars’ computers. They found the vehicles were running cleaner when they were cold than when warm, the exact opposite of what typically happens.
They eventually discovered Volkswagen had installed a sophisticated software algorithm in the engine-control module of cars from 2009 to 2015. It could sense when the vehicles were not on the emission-test cycle based on indicators such as movement in the steering wheel.
After stonewalling the Air Resources Board for nine meetings, senior Volkswagen engineers finally “fessed up” on September 3, Young said. “It was impossible for them to explain why the car was running more clean when it was cold. It was an accumulation of evidence and data that we’d assembled, and they literally ran out of excuses.”
The companies weren’t interested in participating, so the centre rented a privately owned Passat and Jetta and BMW X5.
THE DIESEL-CHEATING affair that toppled Volkswagen’s (VW) chief executive deepened as Germany announced plans to widen its investigation and the scandal threatened to ensnare rival BMW.
BMW plunged as much as 9.7 percent after a German magazine reported yesterday that a diesel version of the X3 sport utility vehicle (SUV) emitted as much as 11 times the European limit for air pollution in a road test.
German Transport Minister Alexander Dobrindt said spot checks of vehicles would not be limited to VW.
“It’s self-evident” that Germany’s motor vehicle administration “will concentrate its investigations not only on the Volkswagen models in question, but will also do spot checks of other car manufacturers,” Dobrindt said.
The entire car industry and the methods used for testing vehicles are coming under scrutiny, following revelations that VW’s “clean diesel” cars have software intended to defeat emissions tests. The European car makers’ lobby group, the ACEA, on Wednesday placed the blame in VW’s court, issuing a statement saying that “there is no evidence this is an industry-wide issue”.
Tip-off
The BMW SUV was road-tested by the International Council on Clean Transportation, the same group whose tip-off led US regulators to investigate a gap between VW diesel emissions in tests and on the road, Germany’s Autobild reported.
BMW said there was no system in its cars that responded to tests differently than it would operate on the road. “All emissions systems remain active outside the testing cycles,” the Munich-based company said.
BMW shares traded down 6.6 percent to € 74.53 (R1 140.83) in early afternoon trading in Frankfurt yesterday. German vehicle maker Daimler dropped as much as 5.8 percent. VW, which has lost more than € 20 billion in market value this week, was 2 percent higher. – Bloomberg