Did Audi have its own gasoline emissions defeat switch, too?

When it comes to its diesel emissions scandal, Volkswagen finds more bad news and a new bottom every month. The most current: VW group chairman Hans Dieter Poetsch is being associated directly with the situation from his days earlier this decade as VW’s CFO. German prosecutors now say they have enough evidence to declare Poetsch as a third suspect in the was-VW-quick-enough-to-tell-the-market flap.

And there’s more mixed news: Both German and US publications say there may be Audis running around the US with unauthorized software that reports Audi diesel and gasoline vehicles are compliant with CO2 emissions standards (when they’re not). Audi is a Volkswagen Group subsidiary.

2016 IMPA Test Days, Monticello (NY Motor Club, October 2016 (photo Bill Howard bill@billhoward.com)

Market manipulation?

There are two Volkswagen story lines active. One is what happens to the half-million VW owners here, and more abroad, who have diesel VWs (also Audis and Porsches): Will their cars be fixed and how soon, and will VW’s payments cover the lost value and hassles of going to and from the dealer. The big story this week is who knew how much about VW coming clean in a timely manner. Investigators are investigating whether VW was slow to tell all it knew, perhaps out of fear of causing even more damage to VW’s stock price.

Monday, German prosecutors confirmed they are investigating current supervisory board chairman Poetsch. A day earlier, a VW statement had said the probe now included Poetsch, as well as (announced back in June) former CEO Martin Winterkorn, all in connection with Volkswagen 2015 news and financial statements, specifically: Did VW delay the news to keep the stock price propped a little while longer.

On the one hand, the news was going to come out sooner or later. On the other, investors who bought VW stock without knowing more about VW’s situation might be annoyed (read: potentially litigious). Plus, companies are supposed to report, right away, news that affects investors and regulators. In 2015, Poetsch was VW Group’s CFO, meaning someone involved in compiling information that would affect VW and VW investors. The New York Times reported his potential transgression is “failing to notify shareholders quickly enough of the financial risks of the diesel emissions cheating scandal,” thus violating securities laws.

Poetsch has been at VW since 2003; previously he was at parts supplier Duerr AG and at BMW AG (as controller). He had a reputation for being calmer and more in the background than some other VW executives, which may have helped him become CEO. According to Automotive News, “One of the last survivors of an inner circle that included Winterkorn and former Chairman Ferdinand Piech, Poetsch was seen as a safe bet to guide the company through turbulent times given his skills as a behind-the-scenes conciliator.”

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Possible issues with 3-liter V6 cars

VW’s main problem is with its 2.0-liter diesel engines, 475,000 in the US alone. VW acknowledges they’re programmed to bypass emissions controls except when the engine computer believes the car is being emissions-tested. In the US, VW and the government have agreed on fixes and penalties: $ 10 billion to repair and/or back the vehicles plus payments for lost value, and $ 5 billion in fines or mitigation payments. Some 800,000 vehicles in Europe are affected, too.

A similar problem exists with V6 diesels used in Audis, Porsches and VWs. There are separate negotiations on possibles repairs or buyback. A federal district judge gave VW until November 30 to come up with a plan to repair or buy back some 80,000 affected vehicles.

The newest news involves reports that Audi vehicles are running software that allows carbon dioxide emissions to be higher than allowed limits except when the car is being tested for emissions. What’s worse is that the software defeat routine may be installed on gasoline as well as diesel Audis.

The Wall Street reported that technicians at the California Air Resources Board (CARB) were able to get an Audi on a test bed to misbehave — run at a high emissions level — simply by turning the steering wheel back and forth, making the car believe it was on the open road. Reportedly the defeat device was in Audis made through May 2016, some nine months after the four-cylinder emissions tricks surfaced.

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2017 VW Atlas SUV

Where VW Group and owners stand now

VW Group stock is lagging. The company is on the hook, from the diesel scandals, for payouts amounting to at least a quarter of the company’s net work (market cap). Dealers are unhappy that they have unsold cars on their lots and uncertainty what they can do with them, since they can’t be sold until they’re fixed. Owners are cranky because their cars have reduced resale value.

On the other hand, VW is forging ahead with new models, particularly the USA-centric Atlas, a three-row SUV about the size of the best-selling Ford Explorer. VW has a cadre of loyalists who like that Volkswagens handle like low-cost BMWs. Cranky as VW diesel owners are, they’ll probably come out ahead: They’ll get their cars fixed (eventually) and they’ll get a nice “restitution” payout for the inconvenience: $ 5,100-$ 9,800. They can have Volkswagen buy their cars back for the blue book value of the car in the month before the emissions scandal went public. If they already sold their cars privately, seller and buyer split the oops-sorry payouts. The only owners who won’t be satisfied are the ones who wish they got back the original purchase price. That won’t happen.

Some older VW TDI cars can’t be fixed and VW won’t offer to fix them. Those owners will have to take the buyout although they can wait a year or so; the cars won’t be taken away from them. People who leased can turn the cars in at any time with no penalty.

Meanwhile, those with diesel VWs still on the road are looking at high mpg, affordable long range driving. Some VWs will travel 700 miles on a single tank of diesel. They just won’t leave the air as clean as it should be.

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