SUV recalled

Audi declares an end to the diesel crisis too soon

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Audi CEO Rupert Stadler is winding up the company's crisis group looking at the diesel emission scandal. Source: DPA

Perhaps it was terrible timing or just an awkward coincidence. But soon after Audi CEO Rupert Stadler met with the press on Tuesday to announce the company’s shuttering of its crisis team dealing with the Dieselgate scandal, German regulators announced that they had found more cheating involving Audi diesel engines.

“At the end of the first quarter we will dissolve the Diesel Task Force,” Mr. Stadler declared, adding that the work of the team’s lawyers and technicians was “80 percent” accomplished. He said that Audi engineers had tried one million possible combinations of engines and transmission settings to make sure that the job was done and had turned over its results to government regulators.

But no sooner had he finished speaking than the regulator, the German Federal Motor Vehicle Authority (KBA), announced that it had found two separate cheating devices on the Volkswagen Touareg three-liter diesel SUV. According to Reuters, the engines are made by Audi.

Audi will build two electric vehicles in Germany, hoping to steal a march on rivals BMW and Mercedes

“Two inadmissible switch-off devices were found upon examination of the VW Touareg three-liter diesel by the Federal Motor Vehicle Authority,” the KBA said, according to the news agency.

Reuters said that the KBA had ordered the recall of 57,000 Touareg SUVs, including 25,800 cars in Germany and the remainder elsewhere in Europe. The same Audi engine was in the Porsche Cayenne SUV diesel model that was recalled in July. Both Porsche and Audi are luxury brands of Volkswagen group. It is common for automakers to share chassis and engine production.

Volkswagen’s American division, which is now independent from Germany, said in an October statement that it has received regulatory approval to carry out repairs of 3.0-liter diesel cars to bring them “into compliance with the emissions standards to which they were certified.”

The new recall further underlined just how difficult is it is for Volkswagen to move on from the diesel emissions scandal. “I’m not at all relaxed about the diesel issue,” the group’s chief financial officer, Frank Witter, said Monday in Wolfsburg. “We’re nowhere near done with it.”

Volkswagen pleaded guilty in the United States to cheating on diesel emissions tests in 2015 and paid $4.3 billion to settle the case brought by the US government. It paid out at least $16 billion to settle lawsuits brought by dealers and car owners.

In April, the US government named Larry Thompson, a former deputy US attorney general, to serve as a corporate monitor at the company until 2020.

Audi had to recall 5,000 A8 luxury sedans in Germany just last month because of excessive pollution levels, indicating the carmaker is not out of the woods yet, despite the CEO’s bravado. In addition, the Munich prosecutor’s office, which raided Audi headquarters in nearby Ingolstadt, is considering charges against several executives because of the emissions cheating.

The Volkswagen group CEO, Mathias Müller, told Handelsblatt over the weekend that the German government should reduce the subsidy given diesel fuel and instead turn its attention to more environmentally friendly vehicles. It was a huge about face for VW, which more than any other carmaker has profited from producing diesel vehicles.

Audi’s Mr. Stadler also said that his firm plans to meet demand for non-polluting cars by building two electric vehicles in the company’s plants in Neckarsulm and Ingolstadt, hoping to steal a march on rivals BMW and Mercedes. To accomplish this, he signed a deal with Audi’s German workers guaranteeing their jobs until 2025, provided they agree to more work flexibility and higher productivity.

He said that the firm also had agreed to better cooperation with other VW subsidiaries such as Porsche. The sports car maker had demanded restitution from Audi for the diesel scandal.

“We have to work together and create synergies,” Mr. Stadler said. “Then we will be better than our competition.”

Markus Fasse is a correspondent for Handelsblatt in Munich and Charles Wallace is an editor for Handelsblatt Global in New York. To contact the authors: fasse@handelsblatt.com and c.wallace@extern.handelsblatt.com.

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