Volkswagen Dieselgate update: how will tomorrow's election affect Volkswagen's future?

November 7, 2016

Unless you've been living under a rock for the past 18 months--and if you have, oh, how we envy you--you know that tomorrow is election day in the U.S. What does that have to do with cars?

Well, as many of us remember from 2008, the government can have a great deal of influence, both positive and negative, on the auto industry. Eight years ago, General Motors and Chrysler sought help from the feds, and they got it. Today, Volkswagen is in the spotlight--and frankly, it's doing everything in its power to get out of the way before the next president is sworn in.

That, and more, in today's Volkswagen Dieselgate roundup:

1. Volkswagen trying to reach settlement on criminal charges by January 20: In June, Volkswagen reached a massive $15.4 billion settlement with U.S. regulators over the emissions-test-cheating 2.0-liter diesel engines it installed on 475,000 American Audi and VW vehicles. But that's not the company's only headache. It's still got to deal with...

a. Class-action lawsuits from owners of those vehicles;
b. A host of lawsuits from individual states;
c. Unresolved plans to fix 85,000 3.0-liter Audi, Porsche, and VW vehicles and compensate their owners (more on that below); and,
d. A criminal investigation being conducted by the federal government.

That last item could be tricky, because a new president always brings new personnel to federal agencies. And after nearly 14 months of investigations and discussions, the last thing Volkswagen wants to do is re-start the process.

2. "Progress" on the 3.0-liter diesel front: On Thursday, U.S. District Judge Charles Breyer met with Volkswagen and government reps to hear about negotiations over 85,000 3.0-liter Audi, Porsche, and VW diesels that violate U.S. emissions regulations. Breyer--the same judge who approved Volkswagen's 2.0-liter settlement package--said that the automaker had made "substantial progress" toward reaching an agreement with regulators and hopes that everything can be resolved at a hearing slated for December 1.

Though the negotiations have obviously been private, insiders say that Volkswagen will likely launch a buy-back program for some 21,000 older Volkswagen Touareg and Audi Q7 crossovers, which by some accounts are un-fixable. As for the remaining 60,000+ vehicles, it appears that Volkswagen only wants to repair them. No matter what fix Volkswagen offers--a repair or a buy-back--chances are good that the company will be required to compensate owners, too, just as it's compensated the owners of 2.0-liter diesels.

That said, all of this could change because...

3. Regulators found another Audi cheat device: German newspaper Bild am Sonntag reports that the California Air Resources Board has found another cheat device in Audi diesels--and this one was in use until May 2016.

The device consists of software that could analyze the turn of a car's steering wheel and engage or disengage emissions-minimizing systems accordingly. If a steering wheel wasn't turned, it would suggest that the car was taking an emissions test, and the software would ensure that CO2 emissions were reduced. If the steering wheel was turned more than 15 degrees, though, it would suggest that the car was driving on actual roads, and the software would allow for higher CO2 emissions.

Apparently, the software was discovered during the summer of 2016. Neither CARB nor Audi have commented on the report, but we wouldn't be surprised if this were one of the reasons that negotiations on 3.0-liter diesels have taken as long as they have.

4. Volkswagen plans to cut costs: Because frankly, what company wouldn't be doing that at this point? The VW brand's budget could lose 3.7 billion euros ($4.1 billion) over the next five years, and Audi and Porsche could see heavy cuts, too. How Volkswagen will manage that while trying to catch up to its competitors in areas like electrification and autonomous technology remains to be seen.

Note: for purposes of clarity, "Volkswagen" has been used to refer to the Volkswagen Group parent company, while "VW" has been used to refer to the company's mass-market brand of automobiles.

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