Deceit and disgrace

Volkswagen's admission to the EPA
kicked off a sequence of events
that would cripple the VW brand in the U.S.
and plunge the company into a year of crisis.

It's not over yet.

September 2015


Sept. 3: After evading scrutiny from regulators for years, VW admits to the EPA that it installed illegal defeat devices in nearly 500,000 2.0-liter diesel engines to fool U.S. emissions tests. The admission follows an EPA threat to block sales of new 2.0-liter diesels unless VW can explain the excess on-road emissions of 2009-15 model year diesels.

Sept. 18: EPA and the California Air Resources Board issue official notices of violation, making the diesel scandal public and casting VW as a villain. "VW was concealing the facts from EPA, the state of California and consumers," EPA enforcement official Cynthia Giles says. "We expected better from VW."

Sept. 19: VW halts sales of new and certified pre-owned 2.0-liter diesels, which at the time represented about 20 percent of its U.S. sales.

Sept 21: VW rolls out dealer assistance programs aimed at stabilizing near-term dealer profits. Michael Horn, then CEO of VW Group of America, writes to retailers: "We understand the pressure these recent events have put your business under and we are committed to providing you support."

Martin Winterkorn

Martin Winterkorn

Sept. 23: Volkswagen AG CEO Martin Winterkorn resigns. Winterkorn accepts responsibility for the diesel "irregularities" while admitting no wrongdoing himself, saying he was "stunned that misconduct on such a scale was possible in the Volkswagen Group."

Sept. 24: Reports surface that Horn may be removed at VW's U.S. chief. VW's National Dealer Advisory Council, led by chairman Alan Brown, strongly objects, saying Horn's removal would be "nothing short of catastrophic to our market and our relationship."

Sept. 25: Matthias Mueller is named CEO of VW Group. The former Porsche chairman vows "maximum transparency" as VW investigates the diesel violations and pledges to improve governance and compliance practices. Horn stays, but will report up to a new North American regional structure for the VW brand to be run by Winfried Vahland, CEO of Skoda at the time. Vahland would later quit VW before assuming the post.

Sept. 28: Horn tells dealers that they will receive a lump sum "discretionary fund" to ease strained finances at many retailers. The payments have continued monthly to help prop up profits.

  • • U.S. sales: 26,141, up 0.6%
  • • Global sales: 513,500, down 4.0%

October 2015

Oct. 1: VW says it has hired U.S. law firm Jones Day to investigate the diesel violations.

Oct. 7: VW withdraws application for EPA approvals needed for 2016 model year diesels after alerting regulators to new, previously undisclosed emissions control software in new engines. VW has yet to attempt selling new diesels in the U.S. market.

Michael Horn

Oct. 8: Horn, above, testifies before a U.S. House subcommittee that the defeat device came from "a couple of software engineers who put this in for whatever reason." He has harsh words for his longtime employer: "This company has to bloody learn and use this opportunity in order to get our act together, and 600,000 people worldwide have to be managed in a different way. This is very, very clear."

Oct. 28: VW Group reports a third-quarter loss of 3.48 billion euros, compared with a 3.23 billion in profit a year earlier.

  • • U.S. sales: 30,387, up 0.2%
  • • Global sales: 490,000, down 5.3%

November 2015

Martin Winterkorn

Regulators in the U.S. and EU plan tougher emissions tests in the wake of the VW cheating scandal.
Photo credit: Bloomberg

Nov. 2: EPA and CARB notify VW of additional Clean Air Act violations, this time in about 10,000 3.0-liter V-6 diesels used in VW, Audi and Porsche vehicles, expanding the scandal to the VW Group's key profit centers.

Nov. 4: VW, Audi and Porsche halt all U.S. sales of new vehicles with 3.0-liter diesel engines, grounding all diesel models sold by the VW Group in the U.S. market.

Nov. 20: In a hopeful sign, VW proposes a fix for 2.0-liter diesels to the EPA and CARB. The same day, regulators disclose that all 3.0-liter diesels sold in the U.S. by the VW Group since 2009 contain defeat devices, expanding the number of affected vehicles to around 85,000.

  • • U.S. sales: 23,882, down 24.7%
  • • Global sales: 496,100, down 2.4%

December 2015

Ulrich Hackenberg

Dec. 3: Ulrich Hackenberg, above, Audi's r&d boss and a 30-year veteran of the VW Group, steps down.

Dec. 8: More than 500 lawsuits filed against VW for the diesel deception are assigned to U.S. District Judge Charles Breyer in San Francisco, establishing the forum to resolve scores of consumer claims.

Hans Dieter Poetsch

VW Chairman Hans Dieter Poetsch
Photo credit: Reuters

Dec. 10: VW describes the origins of the cheating. In a press conference, VW Chairman Hans Dieter Poetsch says engineers installed the cheat software after initially finding it "impossible" for the EA 189 2.0-liter diesel engine to meet stricter U.S. limits on nitrogen oxide emissions legally. VW also suspends nine managers who "may" have been involved in the deceit.

  • • U.S. sales: 30,956, down 9.1%
  • • Global sales: 487,700, down 7.9%

January 2016

Jan. 4: U.S. files civil suit against VW, Audi and Porsche for Clean Air Act violations, alleging VW knowingly hid its diesel cheat software from regulators for years. The alleged violations carry potential penalties of up to $48 billion.

Jan. 10: Mueller stumbles during his first official U.S. visit as VW's CEO, telling NPR that VW "didn't lie" to U.S. regulators about diesel emissions, chalking the violations up to a misunderstanding of the rules. Mueller later recants and apologizes for the violations.

Jan. 12: CARB rejects VW's fix proposal for 2.0-liter diesels as "incomplete" and "substantially deficient," dashing hopes for a quick resolution.

Hans Dieter Poetsch

Hinrich Woebcken

Jan. 19: Hinrich Woebcken, a former BMW purchasing executive, is tapped to run the VW brand's North American operations under a newly formed regional structure.

  • • U.S. sales: 20,079, down 14.6%
  • • Global sales: 521,400, up 2.8%

February 2016

Feb. 4: CARB, EPA receive fix and recall plan for 3.0-liter diesel vehicles.

  • • U.S. sales: 22,321, down 13.2%
  • • Global sales: 394,400, down 4.7%

March 2016

March 9: Horn departs by "mutual agreement" with the automaker after a little more than two years in the post. The move angers dealers, many of whom held Horn in high regard because of his candor and willingness to challenge management in Germany. VW's dealer council calls Horn's exit "a serious blow" and criticizes the "continued mismanagement" of the diesel scandal.

March 15-16: Brown and two other dealers propose reparations for VW's 652 dealers during meetings with VW executives in Germany, including global VW brand chief Herbert Diess and Woebcken

March 31: A handful of VW dealers announce plans to press the factory for an out-of-court compensation package for VW dealers, in part as an alternative to class action litigation. The so-called Dealer Investment Committee takes the stage during a private, dealer-only meeting on the sidelines of the NADA convention in Las Vegas. Group leader Jason Kuhn tells Automotive News: "We both need to get past this, and doing it in a courtroom is not acceptable."

  • • U.S. sales: 26,914, down 10.4%
  • • Global sales: 543,700, down 2.7%

April 2016

VW dealers

VW dealers said they came away from a make meeting during the NADA convention in Las Vegas convinced VW would continue to pursue the objectives championed by former VW of America CEO Michael Horn. From left: Dennis Gaudet, Alan Brown, Jason Kuhn, Michael Difeo and Doug Miles.
Photo credit: Joe Wilssens

April 1: During VW's make meeting at the NADA convention, VW brand chief Diess tells dealers that its U.S. product plan is on track despite the diesel scandal, while offering no clues on dealer compensation. The cordial meeting marks a truce following aggressive rhetoric from some in the dealer body.

April 6: Illinois-based Napleton Automotive Group sues VW, alleging the automaker engaged in a "criminal racketeering enterprise" with its diesel emissions violations. The suit, the first and only filed in a federal court against VW by one of its dealers, seeks class-action status and defies the VW Dealer Investment Committee's calls to forgo litigation.

  • • U.S. sales: 27,112, down 9.7%
  • • Global sales: 476,700, down 3.9%

May 2016

  • • U.S. sales: 28,779, down 17.2%
  • • Global sales: 495,900, down 0.7%

June 2016

June 28: U.S. Justice Department announces VW has agreed to pay more than $15 billion in far-reaching settlements with federal regulators, diesel owners and dozens of states. VW agrees to set aside up to $10 billion to repurchase affected 2.0-liter diesels, contribute $2.7 billion to an environmental remediation fund and spend $2 billion on electric vehicle projects. Deputy U.S. Attorney General Sally Yates calls VW's malfeasance "one of the most flagrant violations of environmental and consumer laws in our country's history."

  • • U.S. sales: 23,809, down 21.8%
  • • Global sales: 492,800, up 4.7%

July 2016

July 17: CARB rejects VW's 3.0-liter diesel fix and recall plans, saying they "fall far short" of legal requirements needed to regain compliance. The decision deals yet another blow to VW and Audi, which used the V-6 diesel in many sedan and SUV models and had expressed confidence that there was a straightforward fix.

  • • U.S. sales: 28,758, down 8.1%
  • • Global sales: 449,100, down 1.8%

August 2016

Aug. 25: VW agrees to compensate its 652 U.S. dealers with a settlement package worth a reported $1.2 billion. The deal is announced in Judge Breyer's San Francisco courtroom by class-action attorney Steve Berman, who represents dealer Ed Napleton. Dealer council chief Brown praises the deal, saying "I feel very confident that this will satisfy every dealer, and I believe every dealer will accept it." Breyer also orders VW to begin settlement discussions for the 3.0-liter vehicles with consumer attorneys and regulators while continuing to work on technical fixes. Repurchasing the roughly 80,000 affected vehicles would add several billion dollars more to VW's growing tab of diesel scandal costs.

  • • U.S. sales: 29,384, down 9.1%

September 2016

James Liang

Sept. 9: James Liang, a VW diesel engineer, pleads guilty to conspiracy, wire fraud and violations of the Clean Air Act for his role in rigging nearly 500,000 2.0-liter diesels with software to mask emissions on lab tests by U.S. and California regulators. Liang, a VW employee since 1983, agrees to cooperate with the government in its ongoing criminal investigation.