Sunday, Aug 20th

Last update07:20:19 PM GMT

You are here Business Asia Pacific Volkswagen recalls cars in China amid diesel emissions scandal

Volkswagen recalls cars in China amid diesel emissions scandal

Earlier Monday, Volkswagen confirmed that it was recalling 1,950 diesel vehicles in China to correct the engine software that the company admits cheated on emission tests , as the fallout from the diesel emissions scandal continues. For now, the recall accounts for 1,946 Tiguan sport utility vehicles and four Passat B6 sedans, all of them imported, the company said. The number represents a fraction of the total number of VWs imported by the country. The company said a technical solution for the removal of the devices is still in development and has not yet been given approval from the Chinese authorities. Diesel cars are not quite popular in China, although, Volkswagen remains one of the best selling brands in the country.

Meanwhile, the European Investment Bank (EIB) said it could demand back the loans made to the German automaker to help fund the development of cleaner engines in light of the emissions scandal which continues to affect the company’s worldwide operations. The EIB has granted loans worth around €4.6 billion ($5.2 billion) to VW since 1990, among other for the development of engines with lower emissions and manufacturing sites in South America, according to Germany’s Sueddeutsche Zeitung.

Volkswagen cheating on diesel emission is a “great shock “and must be thoroughly analyzed since it threatens to hurt the climate credentials of the development bank, EIB chief Werner Hoyer said in an interview Sunday in Lima, Peru, where he was attending meetings of the World Bank and the International Monetary Fund. Mr. Hoyer told reporters that if he found any discrepancies in loans being used for purposes other than intended, the EU bank would have to “ask ourselves whether we have to demand loans back.”

The country’s environment ministry also announced an investigation into VW cars sold in China, after the automotive giant admitted installing device software designed to manipulate emission tests. The devices are able to detect when vehicles are undergoing tests, and later switch the vehicle to a low emission mode in order to achieve more favorable results. Volkswagen admitted that about 11 millions of its vehicles had been installed with that “defeat device”, including Volkswagen Passat, Jetta, Golf and Beetle cars, as well as the Audi A3. This means many people have bought cars which are much less environment friendly than they had been led to believe.

Later Monday, Singapore has suspended sales of the company’s diesel cars after it was found that about 650 Volkswagen diesel vehicles registered in Singapore are affected by the global emissions scandal. These vehicles were fitted with the Type EA 189 EU5 diesel engine and the default device. There are reportedly over 22,000 Volkswagen cars in Singapore.

Singapore’s National Environment Agency (NEA) said in a statement, “NEA takes a serious view of any misrepresentation by Volkswagen Group that their vehicles fitted with the EA 189 EU5 engines comply with the vehicle emission standards stipulated in the Environmental Protection and Management (Vehicular Emissions) Regulations.”

“Approval for all affected Volkswagen diesel vehicle models has been suspended. No new registrations will be allowed. The suspension will be in place until Volkswagen has completed rectification of all affected vehicles,” NEA added.

However, Volkswagen is anxious to keep its extensive operations in China, due to its heavy reliance on China for sales and profits. VW is helped by the fact that China is the largest auto market for VW in vehicle sales, and the operations in the country have not been significantly affected by the scandal over its past doctoring of emission tests. So, at least, VW is not losing on this front, for the sole reason China has had a more balanced approach to reducing emissions than Europe. And diesel cars occupy an even smaller fraction in China than they do in the United States. Another reason why VW might not lose sleep over the recall is that China recently announced a big cut in the sales tax on small cars to revive growth in the world’s biggest automobile market.