Volkswagen says 80,000 Irish cars affected in emission scandal

Volkswagen has confirmed that 79,348 Irish cars feature the software designed to cheat emissions tests.

It said 34,387 Volkswagen passenger cars, 16,484 Audis, 16,004 Skodas, 4,365 Seats, and 8,107 VW commercial vehicles are affected. These are vehicles sold through the firm's authorised dealer network in Ireland. In addition it estimates up to 30,000 used imports currently on Irish roads may also be affected, though it says this "is still under clarification".

In a statement on Thursday evening the firm said: “In the coming days, the VIN (Vehicle Identification Number) details of affected vehicles will be released centrally from brands to retailers. In addition, an international online self-serve process for customers to check if their vehicle is affected based on VIN will be set up.

“In addition for Ireland, a website for all brands based on registration number is planned to cover both domestic sales and privately imported used vehicles from other markets, such as the UK.

“Affected customers will be contacted, with details of a process to get their vehicles corrected in the near future. In the meantime, all vehicles are technically safe and roadworthy.”

Volkswagen has said it will present its revised software solution to authorities in the coming days for approval before it is installed.

The scandal relates to an admission by VW that software code designed to cheat US emissions tests for nitrogen oxide (NOx), a harmful air pollutant, was included in the engine management system of its EA189 diesel engine. The engine in question came in three versions: 1.2-litre, 1.6-litre and 2-litre. These featured in Audi, Seat, Skoda and Volkswagen vehicles between 2008 and 2014. Germany's transport minister says it also manipulated tests in Europe.

In total 11 million cars worldwide are affected. According to the US Environmental Protection Agency, vehicles fitted with the cheating software had real world emission levels up to 40 times higher than what was being recorded in its tests.

Motor tax implications

In terms of motor tax we are still in the dark. The Irish motor tax regime is based on carbon dioxide (CO2) emissions for all new cars registered from July 1st 2008.

VW has not said yet whether removing the defeat device can also impact on fuel economy or CO2 emission figures in vehicles where the software has been activated and, if so, how it plans to address this.

The Department of Environment says any new figures that result in a new certificate of conformity being issued for these cars “would affect the rates of motor tax applicable”. “The matter will be kept under review,” it said.

Revenue says in the event of revisions to emission ratings, it “will consider the implications for vehicle registration tax (VRT)”.

VW cutbacks

Following a seven-hour meeting of Volkswagen’s supervisory board on Wedneday night, the firm said it would take longer than expected to investigate its rigging of vehicle emissions tests, raising the prospect of months of uncertainty for customers, shareholders and staff.

In a sign it is bracing for a blow to its business, the carmaker imposed a hiring freeze at its financing arm on Tuesday and cut a shift at a German engine factory.

There are reports the firm is looking at ways to make savings to avoid a downgrade in the company’s credit ratings, which would lead to higher borrowing costs.

Sources said, however, asset sales were not part of any plans. This follows calls from some analysts for the firm to sell its trucks business or niche brands such as Bugatti, Ducati and Lamborghini.

Moody’s, S&P and Fitch have all put negative outlooks on their credit ratings for Volkswagen, meaning they see a risk they might have to be cut.

“The company has a fairly robust balance sheet -- but also has a very conservative approach to financing and its credit rating,” Bernstein analyst Max Warburton said in a research note this week. “We believe that if the cash costs exceed 10 billion euros, a capital raise is highly likely.”

Mr Warburton noted Volkswagen had 17.6 billion euros of cash at the end of the second quarter, plus 15 billion of marketable securities. But he added it had said in the past that it needed a minimum of 10 billion euros in net cash to run the business.

Under existing company rules, Volkswagen could issue about €8 billion of preference shares, which do not carry voting rights, Mr Warburton said. Beyond that level, it might have to issue ordinary shares, which could require the Piech-Porsche families and the German state of Lower Saxony -- the company’s two largest stakeholder groups -- to come up with cash.

Embarrassment for Germany

The scandal is an embarrassment to Germany, which has long held up Volkswagen as a model of its engineering prowess.

At a motor industry conference in Berlin, the mood was sombre. “This (scandal) is causing damage to the entire German car industry and to German engineering,” said Helmut Kluger, publisher of trade magazine Automobilwoche.

“There is no excuse whatsoever for the VW cheat. Toyota will remain the world’s largest carmaker in the foreseeable future, that’s clear now,” he added, referring to Volkswagen’s goal - achieved in the first half of this year - to overtake Japan’s Toyota to become the world’s biggest selling carmaker.

There is no evidence to date that other carmakers have used the same “cheat” software as Volkswagen.

Klaus Froehlich, development chief at German rival BMW, told the conference the software used by Volkswagen was a “no-go” for his company. Ford’s German boss, Bernhard Mattes, delivered a similar message.

- (Additional reporting: Reuters)