The ramifications of the VW emissions scandal for the automotive industry and EU
One of the biggest corporate scandals of 2015 was undoubtedly the Volkswagen emissions affair. Breaking in the US in September 2015, it emerged that the German car manufacturer had programmed “cheat devices” to falsify compliance with US emissions standards during laboratory testing. It subsequently became clear that VW had installed such devices in up to 11 million cars worldwide.
For VW, the fallout has been enormous. Tens of billions of euros have been wiped off the group’s share price and a further $7.3 billion has been set aside to put things right, with mass recalls on the cars. More is yet to come, with a host of national investigations launched in the aftermath of the scandal.
The US has very much taken the lead in these efforts, typified by the announcement on 4 January that the Department of Justice has begun legal proceedings against VW that could see the car manufacturer pay out as much as $18 billion.
The situation in the EU
For the EU, the situation has been a major embarrassment, with VW one of the most famous European brands.
Most embarrassingly of all, despite longstanding European suspicions, it was through American efforts that the activities of VW were exposed. While the US government sues VW for billions of dollars, the European Commission has chosen to play the waiting game and await the outcome of a number of ongoing national investigations.
Nevertheless, the EU is beginning to cobble together a response. Shortly before Christmas, the European Parliament voted to establish a committee of inquiry into the scandal. The special committee has been given a mandate to investigate the failure of the Commission and Member States to uncover VW’s activities.
In the case of the Commission, new legislation is on the cards for early 2016. A revision of type approval legislation for motor vehicles is expected on 19 January, and it is rumoured that the Commission plans to give itself the authority to review the national regulators who currently assess cars’ safety and environmental performance. Critics have already painted the potential move as a power grab.
These developments all take place against the backdrop of the open legislative proposal on the reduction of pollutant emission from road vehicles, first proposed in 2014. Parliament is now due to vote on the issue in March in what will surely be the first of many showdowns between EU institutions over car emissions.
Underlying the entire scandal is the potential effect of any response on diesel vehicles and the car manufacturing sector more generally. Many EU car manufacturers will be nervously observing developments in both Member States and the European institutions. What started with VW has the potential to have massive ramifications for the industry as a whole, and the EU is only just starting to put together its response.
James Sibley leads on the Transport and Technology portfolios for the DeHavilland EU team. James has two years' experience working in Brussels, taking roles at the European Parliament and a public affairs consultancy. He is a graduate of the University of Exeter.