Woes for diesel Volkswagen owners in the USA

The full repercussions of Volkswagen's diesel emissions scandal have yet to unfold. So far, though, the group's share price has dropped dramatically, Martin Winterkorn has resigned from his position as CEO, and the Environmental Protection Agency is threatening fines of up to $18 billion.

One group of people is unwittingly at the centre of this fiasco: the 482,000 customers in the USA who decided to choose a Golf, Jetta, Beetle, Passat or Audi A3 powered by the Type EA 189 2.0 litre diesel engine. For them, the ramifications remain very uncertain.

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Doubtless Volkswagen will soon be forced by federal authorities to issue a recall notice for those cars. However, quite what the fix is going to be still isn't known.

That's because the culprit is a so-called 'defeat device', which is essentially a software algorithm in the car's electronic control unit. This automatically detects when the engine is being tested, then switches it into a special mode that ensures nitrogen oxide (NOx) emissions are within legal limits.

Under normal driving conditions, NOx output is between ten and forty times the permitted levels.

As a pollutant, NOx creates smog and it can cause or aggravate respiratory conditions like asthma, bronchitis and emphysema. Nasty stuff, in other words.

So surely the obvious answer to Volkswagen's dilemma is to permanently activate the ECU's test setting? Well, NOx levels would certainly become acceptable, but unwelcome side effects might include severely reduced power and performance. Even fuel economy (the single factor that probably attracted many buyers to diesel in the first place) could suffer.

Retrofitting a diesel exhaust fluid (DEF) system is another option. These work by injecting a very pure aqueous solution of urea – commonly known as AdBlue – into the exhaust. Most of the NOx is then converted into benign nitrogen and water vapour, via a reaction process called selective catalytic reduction.

The vast majority of affected cars did not leave the factory with DEF apparatus installed. Adding such a complex modification now would be costly for Volkswagen and inconvenient for consumers, but at least the equipment doesn't impair engine behaviour.

Whatever happens, residual values for diesel Volkswagens in the USA are surely destined to plummet.

For some owners that won't necessarily be an issue, as they've leased their cars and so can simply hand them back when the contract ends. On the other hand, a lot of folks who bought outright or used a traditional loan must be feeling justifiably aggrieved, since for them a real financial loss is suddenly looming.

Unsurprisingly, the American legal profession has reacted immediately. Numerous law firms are busy filing class-action lawsuits that variously demand the cars are replaced or repaired. Of course they seek both punitive and actual damages, too.

Volkswagen has already created a provision of €6.5 billion (around $7.3 billion) “to cover the necessary service measures and other efforts to win back the trust of our customers”. Whether that amount will be enough is up for debate, especially as 11 million vehicles worldwide feature the Type EA 189 engine.

With other countries currently rushing to carry out their own emissions checks, this crisis has the potential to spread quickly around the globe (and encompass further brands).

Related post:
Why buying a diesel car might not be wise

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