Volkswagen of America Chief Michael Horn knew 18 months ago that there was an emissions problem with the German maker’s four-cylinder diesels, but was told it was a fixable problem.
Horn sat before the House Committee on Energy and Commerce Subcommittee on Oversight and Investigations and led off with an apology for the problem that will require the recall of more than 500,000 vehicles in the U.S., then told them essentially he didn’t know what was going on.
As Horn sat before angry group of politicians in Washington D.C., German prosecutors raided the company’s headquarters and other offices as part of the investigation in there about the problem.
VW’s set aside $7.3 billion to deal with the problem and Horn admitted today it may not be enough.
“These events are deeply troubling. I did not think that something like this was possible at the Volkswagen Group,” according to Horn’s written testimony. “We have broken the trust of our customers, dealerships, and employees, as well as the public and regulators.”
Horn stuck to his guns that neither he nor any other senior executives were involved in or approved of any plan to cheat the diesel emissions requirements. While he was aware there might be an emissions issue, he testified he didn’t know about the diesel cheat until “around Sept. 3,” when the company came forward about it to U.S. regulators.
(VW planning to cut diesel line-up in U.S. For more, Click Here.)
He said “a couple” of software developers in Germany were responsible for the cheat, adding that he understood that “it’s very hard to believe, and I personally find it hard to believe.”
The half-million diesels in the U.S. will need hardware and software fixes, but once complete they will meet the window sticker fuel mileage for their vehicles, but the performance will suffer slightly.
The automaker is in the early stages of a five-point plan to resolve the issue, but added that it could take years. The plan begins with a global investigation to determine how it happened. Second, the company is working to ensure that vehicle owners understand the vehicles are safe to drive.
Third, technical teams are developing fixes for each of the three generation of engines affected. Next, VW will amend its compliance processes to ensure it doesn’t happen again and finally the company intends to begin a steady stream of communication with customers letting them know what’s going on and when their vehicles will be repaired.
(For more on the global VW diesel recall, Click Here.)
“As first steps, we have set up a designated service line and website to be a channel for this communication, and I have sent a letter to every affected customer,” he said.
VW is going to rely heavily on its dealer network in the U.S. to get the issue resolved. It was that group that threw its support behind Horn when the scandal broke and saved his job when it was expected he would be fired or quit.
“I can offer today this outline of a path forward toward the goal of making things right,” he said. “Nevertheless, Volkswagen knows that we will be judged not by words but by our actions over the coming weeks and months.”
(Diesel scandal an “existence-threatening crisis,” warns new VW chairman. Click Here for more.)
Aside from the criticism in Europe and the U.S., investors have expressed how they feel about the situation as the maker’s stock price has been cut by more than a third. When the final cost of the fix comes out, it’s expected to take another beating, according to analysts.
The online EPA documents support Horn’s statements. In 2014 VW Germany increased the emissions operations to comply with the EPA requirements, (resulting in 500,000 VW diesels in the U.S. being recalled for the software update) which the EPA acknowledged improved the situation but did not make the engines 100% compliant. That is why discussions between VW Germany and the EPA and others has been ongoing since 2014.