Volkswagen Scandal & Diesel – What Does the Future Hold?

So it looks as though Volkswagen have been pulling a fast one and cheating on their tests, but how does the VW Scandal affect the rest of us?

Volkswagen, the biggest car manufacturer (in terms of sales) has been caught cheating on their tests, more specifically the official emissions test in the US. The Environment Protection Agency (EPA), has found that software installed in a number of the company’s diesel cars, was designed to sense when tests were taking place and adjust settings that help VWs to produce 40 times fewer emissions than in general use. So what happens next after the Volkswagen Scandal has been revealed?

Having admitted that they have ‘totally screwed up’, the latest figures show that there are over 11 million cars within the Volkswagen Group – including Audi, Skoda and Seat – fitted with these devices – with 500,000 of those being in the US. VW have not yet revealed how many of these vehicles are in the UK or, elsewhere in Europe. It’s safe to say that America is not happy, with hundreds of lawyers getting ready for what could be a very expensive year for Volkswagen. The German car giant has put aside £4.7 billion to cover any costs involved however there are a potential $18 billion worth of fines coming their way.

Whilst Volkswagen have apologised, replaced Chief Executive Matthias Mueller with Martin Winterkorn and reportedly fired some of their senior R&D heads it seems as though this scandal has still badly tarnished the Volkswagen name and possibly reputation, with share prices dropping.

Why is the Volkswagen Scandal such a big deal?

Well apart from the fact the biggest car manufacturer has been lying to its customers and the EPA, really the bigger problem is the future of diesel and where it fits into the green-friendly future.

Diesel cars have recently come under scrutiny, with pollution being such a problem in the UK’s biggest cities, and the European Commission’s aiming to reach targets of a 40% reduction in greenhouse gas emissions by 2030 (from 1990 levels).  The Department for Environment, Food and Rural Affairs (DEFRA) has announced that in order to meet these targets new rules must be applied to Britain’s biggest cities more specifically – London, Birmingham, Southampton, Nottingham, Leeds and Derby. These rules would include introducing a good cycle-infrastructure, electric vehicle charging facilities, low-emission public transport and a proposed Ultra Low Emissions Zone (ULEZ) in the heart of London. The ULEZ is due to come into force 7 September 2020.

What is the ULEZ?

Transport for London have stated that the Ultra Low Emission Zone or ‘ULEZ will operate 24 hours a day, seven days a week in the same area as the current Congestion Charging Zone (CCZ). All cars, motorcycles, vans, minibuses and Heavy Goods Vehicles (HGVs) will need to meet exhaust emission standards or pay an additional daily charge to travel within the Zone’. Because of these rules a number of small diesel cars and vans manufactured since January 2006 will most likely be charged when driving through the ULEZ. As these European Commission’s targets for reducing greenhouse gases are so high, it’s likely that these Ultra Low Emissions Zones may come into force in other big cities.

Why is there an emphasis on diesel cars?

Many of us were encouraged, in the form of tax incentives, by the previous Labour government to purchase diesel over petrol cars which has no doubt led to the popularity of these in the UK. This was because the government was focused on reducing carbon dioxide (CO₂) which of course petrol cars produce more of. However, the issue now is that diesel vehicles produce higher levels of nitrogen dioxide (NO₂), which has proven to be a deadly toxin in its own right, with a suggested 5900 residents of London having due to NO₂ in 2010.

So, the European Commission’s – and the UKs, targets include aiming to reduce levels of NO₂ now that we have a better understanding of the health risks.

What’s the future for diesel?

Although diesel may only be part of the problem, with such high targets to meet it’s unclear how owner’s of diesel cars, and car manufacturers will be affected.  There is a sense that in Europe and the UK, the use of diesel will lead to mounting restrictions.

There are also of course huge pressures on car manufacturers to ensure their vehicles can measure up, which is reflected in the Volkswagen scandal.

When a company which is known for its ‘Vorsprung durch Technik’ roughly translated as ‘advancement through design’ is then caught in a scandal such as this, you have to wonder is this a case of the biggest car manufacturers being unable to produce vehicles which can pass the stringent emission tests in the US, or is it just a simple incident of cheating for their own gain. Either way, the question now being posed is if VW can cheat then why not others?

How can the Volkswagen scandal affect you?

There is currently a debate under way about whether this scandal will affect the resale value of vehicles which are part of the Volkswagen Group. It looks as though in the short term there will be an effect on the value of these cars and their desirability whilst we wait for Volkswagen toconfirm where the other 10.5 million cars with these cheat devices are. However in the long run experts do not believe that there will be a huge impact on car values in the UK. There are other reasons why people by diesels other than the emissions, for example the fuel economy tends to be better than petrol engines and of course the pulling power.

All we can do for now is wait until 7th October to find out more how Volkswagen will ensure their vehicles meet the national emission standard without cheating – unless of course they find some way out of that one?

Tell us what you think, get in touch with the team here by emailing marketing@heritagecarinsurance.co.uk