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No quick fix to VW cheating scandal

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Volkswagen’s new boss says the auto giant will need more than a year to fix all its pollution-cheating cars, as the company revealed that more than 90,000 of its vehicles sold in Australia are fitted with the dodgy software.

Matthias Mueller, who took over the driver’s seat at VW at the height of the crisis, said on Wednesday he did not believe top management could have been aware of the scandal which threatens to cost the company billions in vehicle overhauls and fines.

The world’s biggest car maker by sales has launched investigations into who was behind the scam involving over 11 million diesel cars which were equipped with software that switches the engine to a low-emissions mode during tests.

The so-called defeat devices then turn off pollution controls when the vehicle is on the road, allowing it to spew out harmful levels of toxic gases.

VW revealed late yesterday that thousands of the company’s vehicles sold in Australia are fitted with the cheating software.

Volkswagen Australia admitted that 77,149 of its cars sold between 2008 and 2015 are fitted with the software, while its subsidiary Audi Australia said 14,028 of its vehicles were affected.

The company says owners of the affected vehicles, including post-2009 Polo and Golf models, don’t need to take any action until a technical solution is made available by its head office in Germany.

“We understand the disappointment and frustration felt by our customers, dealers and partners in Australia and apologise for any inconvenience this may cause,” Volkswagen Group Australia managing director John White said.

“We are doing everything possible to fix the problem and will be making further announcements in the near future.

“It is important for customers to note that all affected vehicles remain technically safe and driveable and that we will contact them in time to advise what the next steps are.”

Confirmation of Australia’s inclusion in the worldwide emissions cheating scandal comes more than two weeks after it first broke.

The world’s biggest carmaker by sales, Volkswagen has admitted fitting 11 million vehicles with so-called defeat devices that switch the engine to a low-emissions mode during testing, allowing the car to exceed emissions regulations during normal operation.

Mueller has set aside 6.5 billion euros ($A10.3 billion) to fix the affected vehicles.

But Volkswagen also faces fines of up to $US18 billion in the United States, and the Australian Competition and Consumer Commission has also flagged fines amounting to millions of dollars.

Class actions on behalf of affected customers are also likely.

Australian Volkswagen owners can visit the company’s website or call its customer service centre to check if they are affected.

The shock revelations have wiped more than 40 per cent off Volkswagen’s market capitalisation, but the direct and indirect costs are still incalculable as the company risks fines in several countries and possible damages from customers’ lawsuits.

The powerful US Senate Finance Committee says it is probing whether the company used the defeat devices to unfairly gain tax credits on diesel cars sold in the United States.

Altogether, buyers of VW cars and the company itself may have benefited from more than $US50 million ($A69.36 million)in such subsidies under the 2005 Alternative Motor Vehicle Tax Credit, in its 2009 and 2010 models, the committee said.

VW America’s chief Michael Horn is also due to appear before a congressional committee on Thursday.

At home, Volkswagen submitted to authorities its plans and timetable on fixing the affected vehicles.

German Transport Minister Alexander Dobrindt confirmed receipt of the letter, which is to be examined by relevant authorities before the proposed measures can be given the go-ahead.

“If all goes as expected, we can start the repairs in January. By end 2016, all the cars should be in order,” VW chief Mueller told the Frankfurter Allgemeine Zeitung daily.

The former Porsche chief added that “four people, including three responsible directors on different levels of the development of Volkswagen engines,” had been suspended over the deception, adding that “others were already on partial retirement”.

German press have named Audi’s development chief Ulrich Hackenberg as among those suspended, although Volkswagen would not confirm the information.

Mueller said he did not believe that the management team of Martin Winterkorn, who was forced to quit as Volkswagen chief executive at the height of the scandal, could have been aware of the scam.

“Do you really think that a boss would have the time to be concerned about the details of engine software?” he said.

The development of an engine is “a complex process that involves interaction between programmers, engine and gear box developers and those who deal with measurements for official tests,” he said, adding that these are tasks in which “a director is not directly involved”.

Volkswagen has said that the 6.5 billion euros ($A10.14 billion) it set aside in the third quarter was only the estimated sum to cover repairs of affected vehicles.

Mueller outlined the complexity of the repairs, saying: “We need not just three solutions, but thousands.”

This is because there are different models of cars involved, with different types of gear boxes or country-specific designs.

To meet the billions of euros in financial outlays, Mueller said the group would embark on a huge cost-cutting program and review several projects.

Germany’s football world would not be spared, as Volkswagen owns the VfL Wolfsburg club and has investments in 17 professional clubs.

– News agencies

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