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The Volkswagen recall scandal could be more keenly felt in Europe

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CNBC recently reported that Michael Horn, the CEO VW’s US division, issued an apology for circumventing the clean air rules on diesel cars. The Environmental Protection Agency (EPA) found that software in several diesel cars could deceive regulators.

Horn said: “Our company was dishonest with the EPA and the California Air Resources board, and in my German words, we have totally screwed up.” 

The allegations may have allegedly affected 482,000 vehicles in the US, but manufacturers worldwide have been put under pressure to rule out any exposure to the rigging of emissions testing.

According to the Transport & Environment group, “there is strong evidence that similar illegal devices are also used in Europe by both VW and other manufacturers”.

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The group’s clean vehicles manager, Greg Archer, is of the belief that the fallout from the scandal could have more impact on Europe. “Diesel cars are niche in the US, and in most of the rest of the world, representing just one in seven cars sold worldwide,” he said. “But in Europe, over half of new cars are diesels.”

Archer suggested that 7.5 million of the ten million diesel cars sold globally in 2014 were bought in Europe.

Mike Hawes, the CEO of the UK’s Society of Motor Manufacturers and Traders, suggested the “EU operates a fundamentally different system to the US – with all European tests performed in strict conditions as required by EU law and witnessed by a government-appointed independent approval agency.

“There is no evidence that manufacturers cheat the cycle. Vehicles are removed from the production line randomly and must be standard production models, certified by the relevant authority – the UK body being the Vehicle Certification Agency, which is responsible to the Department for Transport.

“The industry acknowledges, however, that the current test method is outdated and is seeking agreement from the European Commission for a new emissions test that embraces new testing.”

Christian Stadler from Warwick Business School said there was no question that this is a big problem for Volkswagen and could lead to the CEO losing his job. He compared the scandal to Toyota recalling nine million cars between 2009-11.

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“To some extent, the cheating by Volkswagen seems more blatant, but the numbers are lower and there are no fatalities involved,” he said. “This suggests that in the heat of the moment the long-term effect on Volkswagen maybe overstated. Sure it will hurt, but maybe not quite as bad as we expect right now.”

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