BERLIN (Bloomberg) -- Volkswagen Group will embark on one of the biggest recalls in European automotive history, affecting about 8.5 million vehicles in the EU, after German authorities threw out the carmaker’s proposal for voluntary repairs.
Germany's motor transport authority (KBA) demanded a recall of cars in Germany after reviewing proposals VW filed last week to fix cars fitted with software designed to cheat on pollution tests, German Transport Minister Alexander Dobrindt said today in Berlin.
The mandatory recall is the basis for callbacks throughout Europe, where diesel accounts for more than half the market.
VW will contact customers and inform them direct, VW said in a statement. VW brand has set up websites in various countries where customers can enter the chassis number of their vehicle to find out is their vehicles affected. Similar customer websites are active for the Audi, Seat and Skoda brands.
Germany’s rare public snub to its biggest carmaker came after VW circumvented emissions regulations starting in 2008. Germany’s demands will speed a process that VW said will last beyond 2016, and give authorities more control.
“The KBA’s decision opens up the possibility of a common and coordinated response in all European Union states,” VW Group CEO Matthias Mueller wrote Dobrindt today in a letter obtained by Bloomberg. “Such a unified procedure would be in the European spirit as well as in the interests of customers.”
Biggest recall
The 8.5 million affected cars represent slightly less than one-third of VW’s auto deliveries in the region from 2009 through August, based on sales figures the company published for the five divisions involved.
The recall of 2.4 million cars in Germany is also the country’s biggest since its current rules for callbacks took effect in 1997, more than the record 1.9 million cars the entire auto industry brought back in under repair programs last year, according to data from the Center for Automotive Management in Bergisch Gladbach, Germany.
“It’s an unusual measure to be ordering a mandatory recall,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI. “It shows to me that the KBA is losing patience with VW’s slow response on what to do to fix the engines so far. Customers have been left unsettled.”
The mandatory recall will be more expensive for VW because the company will need to work on the cars more quickly, Ellinghorst said. The manufacturer has yet to specify exactly how it will fix the cars, though it has said some will require only a software update while others will need new or rebuilt engine parts.
VW must share technical details of its fix with authorities by mid-November, and the recall will begin in January. The KBA will test vehicles to ensure the repairs were successful, Dobrindt said.
New parts necessary to fix some vehicles will probably be ready by next September, he said. Throughout Europe, Dobrindt has estimated that VW will probably need to exchange or rebuild parts for about 3.6 million engines.
For the sake of customers and the image of the automobile, “we will clear up what happened at Volkswagen,” Enak Ferlemann, state secretary in Germany’s transport ministry, said in a speech in the lower house of parliament. “Germany will stay the No. 1 auto country.”
Leipzig meeting
As VW grapples internally with the crisis, about 400 of its top executives met in Leipzig today. Another of the company’s top engineers, Falko Rudolph, chief of a parts factory near Kassel, was suspended as part of the investigation, a person familiar with the situation said, asking not to be named because the suspension is private. Rudolph couldn’t be reached for comment.
The carmaker admitted in September to designing software so that 482,000 of its diesel cars in the U.S. would turn on full pollution controls only when undergoing laboratory emissions testing, not on the road.
Since then the deception has been shown to be far broader, affecting about 11 million cars worldwide. The software was also active in diesels VW sold with the same EA189 engine in Germany, Dobrindt said.
“The KBA is under pressure to show to the public they’re on top of this and that they’re in the driver’s seat,” said Stefan Bratzel, head of auto research at the University of Applied Sciences. “Recalls to fix key safety issues that go to the core of a vehicle’s operation almost always occur voluntarily, with the KBA monitoring. So making this fix -- while the cars are running safely -- a mandatory one shows the political pressure.”
The diesel crisis has wiped more than 21 billion euros ($23.9 billion) off VW’s market value.
VW faces a “large need for change,” Mueller told his top executives in Leipzig, according to a transcript of his speech. “I don’t think much of revolution. And the Volkswagen Group doesn’t need one. What we need is courage to act consequently, the will to change.”
