California, Feds Reject Volkswagen Recall 'Fix'

Last week, the California Air Resources Board (CARB) said "no deal" to Volkswagen's proposal to buy back some of the vehicles that were outfitted with cheat devices. According to CARB, the plan, which would see the recall of only a fraction of the 600,000 U.S. cars affected in the latest VW scandal, does "not adequately address overall impacts on vehicle performance, emissions and safety," and would not fix the cars' pollution problems quickly enough.

CARB's response comes a week after the U.S. Justice Department filed a suit against VW for violating federal clean air laws and attempting to deceive consumers and regulators about the vehicles' actual performance.

The suit was filed on behalf of the EPA, which announced yesterday that it concurs with CARB's rejection. In a statement last week addressing the EPA's plan to take VW to court, Assistant Administrator Cynthia Giles, who represents the Office of Enforcement and Compliance Assurance, said that legal action was an initial step  in "bringing VW to justice."

Giles continued: "So far, recall discussions with the company have not produced an acceptable way forward. These discussions will continue in parallel with the federal court action."

Two issues that contributed to the plan's rejection include lack of specificity in detail that would allow enforcement officials to adequately evaluate the repairs from a technical standpoint; and the failure of the plan to fully address the emissions problems caused by the cheat devices.

After months of stating that the defeat devices were the action of two rogue engineers and not a concerted effort by the corporation to deceive consumers about the potential performance of the cars, VW's management now seems to have another way to explain the problem that has engulfed its global business model. In a private interview with National Public Radio on Sunday, Volkswagen CEO Matthias Mueller countered assertions that VW lied when it was directly asked by EPA officials for details about its emissions systems. Mueller said the problem was a misunderstanding in language, not a deception.

"[We] had a ... not the right interpretation of the American law," said Mueller, who added that they "didn't understand the question at first" when the investigators asked about defeat devices in the cars.

"We all know that we have let down customers, authorities, regulators and the general public here in America, too ... We are — I am — truly sorry for that."

At this point it remains unclear whether VW really understands the scope of the challenges it is facing. With billions of dollars mounting in federal fines, and no clear plan on the table as to how to address the ongoing emissions problems of those vehicles still on the road, the rejection of its proposal to shore up the damage may be the least of VW's problems. More than 40 state attorneys general have launched an investigation of VW, and consumers and car dealers have initiated their own legal claims against the global car manufacturer. Mueller's plea for one to three more years to straighten out Volkswagen's apparent technical difficulties may be, at best, idealistic in the current market.

Image credit: Gerry Lauzon