Volkswagen Proposes 2.0-Liter Diesel Fixes As Crisis Continues

Being a Volkswagen executive these days may be one of the more thankless jobs in the auto industry.

Among groups including car buyers, business travelers, and environmental advocates, the first association with the brand now is often now "diesel emission scandal.”

But differing customer outreach and occasionally combative statements between its German and U.S. arm have left owners, analysts, and regulators scratching their heads over Volkswagen's behavior and its inept crisis-management tactics.

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VW has now submitted plans for fixing its 2.0-liter TDI four-cylinder diesel cars to U.S. regulatory agencies.

Last Friday, the automaker delivered its proposal for fixing 482,000 four-cylinder diesel cars from model years 2009 through 2016 to the Environmental Protection Agency and the California Air Resources Board.

No details made public

Details of that plan, however, are being withheld from the public, the automaker told Edmunds.

That leaves owners of the affected cars in a holding pattern until the two agencies have assessed the plan. It's also entirely possible they'll ask for changes to VW's proposal, which they'll then review again.

While Volkswagen met the last Friday's deadline to submit its plan--roughly two months after the scandal broke in September--no timetable has been released for approval of any plan and completion of recall work on the TDI cars.

Under the best possible circumstances, recalls that involve only software updates might begin sometime early next year and continue through the spring and summer.

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More complicated fixes, including component replacement, could take considerably longer, perhaps stretching into 2017. VW continues to stress that the cars remain safe to drive, and that owners should continue to do so.

Separately, German regulators have approved Volkswagen's proposed fixes for the 2.0-liter diesels in that country and, according to VW Group chairman Matthias Müller, given a "basic go" to its plan for 1.6-liter diesel fixes as well.

Plans for the smallest of the three TDI engines affected in the European Union, its 1.2-liter diesel, are still in process.

The fixes for the German diesels, however, will be far less challenging because EU emission standards are far less stringent than those in effect in the U.S. since 2008.

In a Monday speech at VW headquarters in Wolfsburg, Müller said "the solutions are confirmed" for most of the technical details of the three fixes. He called the costs of the German changes "technically, physically, and financially manageable."

The 2.0-liter engines in Germany will get a software update, while the 1.6-liter TDI four-cylinders will receive not only a software update but a new grille and cartridge for their air-filter system. The 1.2-liter engines are thought to require only a software update.

U.S. challenge far worse

The challenge in North America, however, is far greater than that of getting EU-market diesels to meet far more lax Euro 5 standards for cars sold through 2014.

It's possible that 325,000 of the 482,000 affected 2.0-liter diesels in the U.S. would need to have a Selective Catalytic Reduction system fitted, which comprises a new catalytic converter, a tank of urea liquid, and associated plumbing to inject the urea into the exhaust aftertreatment system.

Such a change would likely cost several thousand dollars per car, suggesting that VW may be forced to buy back some or all of those vehicles.

Indeed, last week two U.S. Senators urged that the company do just that.

Buybacks urged already

Senators Edward Markey [D-MA] and Richard Blumenthal [D-CT] noted that the company's sole response to U.S. owners over two months has been a pair of $500 gift cards--one usable only at VW dealers--and expanded roadside assistance,

The senators called for VW Group of America to buy back all affected cars in a letter to U.S. CEO Michael Horn.

"We urge you to offer drivers the fair market value for these vehicles that was in place before VW's illegal activity was made publicly known," the pair wrote.

European VW owners are not being offered any such "goodwill" benefits, which alone could cost $8 billion for the more than 10 million diesel cars affected.

European and British consumer groups have recently issued recent statements slamming Volkswagen for keeping customers in those markets in the dark, and providing few updates beyond standardized corporate feel-good statements.

What is VW thinking?

Indeed, in the U.S. too, fully eight weeks after the scandal broke, VW has issued only a handful of statements—promising to get to the bottom of the deception even as new issues continue to come to light.