Volkswagen’s cheating gains to be a factor in penalty decision
JUST how much money Volkswagen (VW) made by cheating on US emissions tests will help determine the penalties it pays, according to the Environmental Protection Agency (EPA).
The agency intended “to assess the economic benefit to VW of non-compliance and pursue appropriate penalties”, Christopher Grundler, the director of EPA’s Office of Air and Radiation, and Phillip Brooks, the director of civil enforcement for air, said in a written statement on Wednesday to the House Energy and Commerce Committee. The oversight and investigations subcommittee was due to hold a hearing yesterday.
VW’s US chief, Michael Horn, acknowledged in written testimony that he had learned in early 2014 the company might not be following emissions regulations on its diesels, a cornerstone of VW’s US expansion plan. The topic came up again later that year, Horn said, when he was told VW’s technical teams had a plan for fixing the cars involved.
The company didn’t admit its cheating until a September 3 meeting with the EPA and the California Air Resources Board.
Pollution harm
“Remedies should match the wrongdoing,” Erik Gordon, a professor with the Ross School of Business at the University of Michigan, said.
When US regulators lacked statutory authority to impose higher fines on vehicle makers, including General Motors, over flawed ignition switches, “the small fines frustrated the public and Congress”, he said.
Under the Clean Air Act, VW may be liable for fines as high as $18 billion (R242bn). It has already set aside more than € 6.5bn (R98.5bn) for charges related to the anticipated recalls. The car maker will ultimately face costs and lost revenue from its damaged image of more than € 35bn, according to an estimate by Warburg Research.
The EPA was also expected to look at how much harm the excess pollution from VW’s violations had caused, and the best ways to mitigate that damage, Grundler and Brooks said.
“These events are deeply troubling,” Horn said. “I did not think that something like this was possible at the Volkswagen Group. We have broken the trust of our customers, dealerships and employees, as well as the public and regulators.”
Responsible parties would be identified and held accountable, and VW would rebuild its reputation, he said. Technical teams were still working to identify solutions for consumers, he said.
VW on Wednesday said there would be multiple solutions for different engines and countries, and that the work would continue at least through the end of 2016. – Bloomberg