making good

German carmakers pressured to accept Dieselgate hardware fix

VW-Diesel
Oh, here's your problem: Diesel. Source: DPA

Germany’s auto industry knows that it has to clean up Dieselgate cars to keep them on the road, but it’s only prepared to go so far. “Hardware retrofits are expensive, complex and tedious,” said Matthias Wissmann, president of German automotive industry association VDA. Mr. Wissmann was responding to a new report by a government working group which called for carmakers to agree to hardware repairs. Members claim that the industry has yet to establish how its preferred solutions – software updates and trade-in premiums – will bring down emissions.

The report, led by Georg Wachtmeister, an engines expert from the Technical University of Munich, concluded that equipment fixes would be a “very efficient measure for reducing emissions,” according to German magazine Der Spiegel. The transport ministry tapped Mr. Wachtmeister to join its commission of inquiry into Volkswagen’s Dieselgate scandal in 2015. Ahead of the next meeting of carmakers and members of government, his working group, one of four established at the first diesel summit in August, is trying to come up with ways to bring those models in line with emissions standards to keep them from being banned from roads in certain areas.

Officials in some German states want federal authorities to review whether car companies can be compelled to retrofit older diesel models. Among them is Thomas Griese, an environment ministry official in the southwestern state of Rhineland-Palatinate. In a letter to the transport ministry, which has been seen by Handelsblatt, he claims that manufacturers have yet to offer any improvements “which could be presented in lawsuits as a defense against driving bans.”

At last year’s diesel summit, Volkswagen, Daimler and BMW agreed to deliver software upgrades for affected models, but executives were of one mind on the issue of hardware. “We fundamentally think it’s out of the question to undertake hardware retrofits,” Daimler boss Dieter Zetsche said. The reasons, according Harald Krüger, Mr. Zetsche’s counterpart at BMW: “Firstly, because of the expense, but also because the effect is debatable.”

It is still possible, however, that Berlin could face legal action from the European Court of Justice.

Those views run counter to what environmentalists and even the ADAC, Germany’s automobile association, have long asserted, which is that hardware fixes would reduce nitrogen oxide emissions by 90 percent, compared to just a quarter with software updates. With his report, Mr. Wachtmeister is going against both the auto industry and the country’s transport ministry. For carmakers, there is major money at stake. Mandating hardware retrofits would mean recalling and repairing more than 5 million vehicles at a cost of €1,300 ($1,593) per car to install a urea tank, which would take up an extra 18 liters of trunk space.

Amid the debate over how to fix older diesel vehicles, there are also signs that newer models don’t always measure up. The Bild am Sonntag newspaper reported that the country’s vehicle regulator, the KBA, issued six mandatory recalls for 127,000 of Audi’s newest diesel vehicles after discovering “illegal defeat devices.” Audi is promising a software fix, but the questions the incident raises – about how clean newer models really are – could provide further ammunition for driving-ban proponents.

From the working group that commissioned Mr. Wachtmeister’s report, Handelsblatt has learned that Baden-Württemberg and other states are pushing for a review of the impact of voluntary software updates and exchange premiums. Regional officials also want an external legal opinion that could compel manufacturers to retrofit older models. The federal transport ministry has rejected calls to make such fixes mandatory.

Germany’s transport and environment ministers sent a letter to the European Commissioner for Environment, Karmenu Vella, outlining the steps that the government has taken so far to address the Dieselgate fallout. It is still possible, however, that Berlin could face legal action from the European Court of Justice for failing to adhere to emissions standards.

Daniel Delhaes reports on politics, transport and airlines from Berlin. Amanda Price translated and adapted this story into English for Handelsblatt Global. To contact the author: delhaes@handelsblatt.com

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