Volkswagen Scandal Ripples Through Entire Auto Industry

The impact of the Volkswagen emissions scandal is enormous, affecting the health of local communities as well as the livelihood and reputation of auto dealers and mechanics, on top of hundreds of thousands of car owners who bought into the company's "clean diesel" marketing. That's just for starters. The U.S. Environmental Protection Agency has also placed all auto manufacturers under heightened scrutiny, and the scandal casts a pall over Volkswagen's other sustainability projects.

The Volkswagen scandal ripple effect

The Environmental Protection Agency held a press conference on September 25 to update journalists on its response to the Volkswagen scandal. Triple Pundit dialed in by phone, and we can testify that the agency's officials were extremely forceful in their presentations.

Janet McCabe, Acting Assistant Administrator for the Office of Air and Radiation, kicked things off by providing journalists with the big picture on EPA emissions regulations. She made the case that that air quality has "dramatically" improved as a result of federal oversight, and she noted that the regulations "level the playing field" for auto manufacturers. As a simple matter of consumer protection and truth in advertising, EPA regulations also ensure that consumers "get what they pay for."

Christopher Grundler, Director of the Office of Transportation and Air Quality, described the criminality of cheating on emissions testing. He laid out EPA's jurisdiction, stating that "it is not legal to sell a new car in the United States without EPA certification."

Noting that the EPA auditing process changes as automobile technology progresses, Grundler described how EPA is "upping its game" in response to the Volkswagen scandal and "putting manufacturers on notice" that the agency will be looking specifically for defeat devices. He wouldn't give away any specifics, except to let manufacturers know that "we will be keeping your car longer."

On September 25, EPA also sent a letter notifying auto manufacturers of the change in emissions testing procedures. It was short and to the point. Here is the relevant passage:

...EPA may test or require testing on any vehicle at a designated location, using driving cycles and conditions that may reasonably be expected to be encountered in normal operation and use, for the purposes of investigating a potential defeat device.

Such testing can be expected in addition to the standard emissions test cycles when Emissions Data Vehicles (EDV), and Fuel Economy Data Vehicles (FEDV) are tested by EPA. Manufacturers should expect that this additional testing may add time to the confirmatory test process and that additional mileage may be accumulated on the EDVs and FEDVs...

To be clear, the ripple effect on other manufacturers should turn out to be a positive. With tighter procedures in place, auto manufacturers can use the more stringent standards in their marketing -- if their vehicles achieve certification, that is.

The Other Ripple Effect

Regardless of whether or not Volkswagen's other models pass the new procedures, the enormous black mark of its criminal behavior casts a shadow of suspicion over the entire "clean diesel" market in general, and it also affects public perception of the company's CSR intentions.

The emissions scandal is not simply a case of consumer fraud. Concrete public health impacts are involved, which certainly undercut Volkswagen's "Think Blue" CSR program, especially regarding its carbon offset initiatives.

The engineered deceit behind the scandal also calls into question whether or not sustainability systems at its "green" manufacturing facilities are really performing the way they are supposed to.

Similarly, the Volkswagen emissions scandal taints a number of other European brands involved a  "clean diesel" marketing push aimed specifically at U.S. car buyers. The initiative, "Clean Diesel: Clearly Better" launched in 2012 including BMW, Daimler AG, Porsche, and Mercedes in addition to the Volkswagen and Audi brands.

The scandal may also raise renewed investigations into the compatibility of Volkswagen diesel engines with biodiesel, and call into question the company's commitment to continue evolving as higher blends of biodiesel enter the market.

Ironically, back in February Volkswagen called for more investment in electric vehicles, a zero-emission solution that virtually eliminates EPA certification procedures.

Volkswagen has been involved in R&D initiatives for electric vehicles as well as an effort to boost the electric vehicle charging network in the U.S. Last year the company even began offering a turnkey solar package for homeowners with the purchase of its e-Golf model.

Unfortunately, if consumers turn away from the entire brand, Volkwagen may see its share of the U.S. electric market plummet.

Image: via U.S. EPA