By Sneha Shankar -
German automaker Volkswagen (DE:VOWG) AG will recall 1,950 diesel vehicles in China to correct the so-called defeat device software that allowed its vehicles to cheat on emissions tests. Meanwhile, the European Investment Bank (EIB) said it might recall a loan to the German automaker as the scandal continues to affect the company's worldwide operations.
Volkswagen said Monday that it will recall 1,946 Tiguan sport utility vehicles and four Passat B6 sedans equipped with the four-cylinder Type EA 189 diesel engine. China’s quality watchdog, the General Administration of Quality Supervision, Inspection and Quarantine, said, according to Reuters, that it was “highly concerned” about the mechanism. While AQSIQ did not mention what action it would take, the country’s environmental ministry said that it would begin an investigation against Volkswagen.
About 11 million VW cars worldwide are equipped with the software, which switched on pollution controls when vehicles went through emissions tests, to show a false reading.
"Volkswagen would like to sincerely apologize for any inconvenience caused to our customers," the company said, in a statement Monday, according to AP, adding: "We would like to assure that we will do everything humanly possible to win back trust and take care of any concerns."
The company also said in the statement that it is “urgently investigating if any of these vehicles are indeed affected.” Volkswagen China said that none of the vehicles with this engine were produced or sold by any of its other brands.
Meanwhile, a Sunday report by the BBC said that the European Investment Bank (EIB) could recall a loan it gave to Volkswagen for the development of low emissions engines, amid the scandal.
EIB President Werner Hoyer told a local newspaper that he was “very disappointed” with the company and that the bank will investigate how the company spent the $5.2 billion in loans that it has received since the 1990s, Time magazine reported.
“The EIB could have taken a hit [from the emissions scandal] because we have to fulfill certain climate targets with our loans,” Hoyer reportedly said, according to German newspaper Süddeutsche Zeitung.
On Thursday, at a hearing before the U.S. House of Representatives, head of Volkswagen Americas Michael Horn blamed “individuals” for the rigged software. "This was a couple of software engineers who put this in for whatever reason," Horn said, at the hearing, referring to the software installed in the diesel cars since 2009, adding that “this was not a corporate decision."
"Some people have made the wrong decisions in order to get away with something," Horn said, defending the German carmaker over the issue, for which U.S. lawmakers attacked federal regulators for failing to detect the scandal.
The company is expected to submit a preliminary plan to fix the “defeat devices” next week to American and Californian regulators, the U.S. Environmental Protection Agency (EPA) reportedly said Thursday.
The EPA and the California Air Resources Board will “begin evaluating the proposed software” after the company delivers the software to them. Volkswagen reportedly said that it will start fixing nearly 500,000 cars made between 2009 and 2015, in January.
While China is the largest auto market for Volkswagen in vehicle sales, operations in the country have not been significantly affected by the scandal. However, overall auto sales in the country fell 3.4 percent, as compared to a year earlier and the company also blamed the weakness in China's economy for the 16 percent fall in its second-quarter global profit, AP reported.
Volkswagen also recalled 394,000 vehicles in China in 2013, to repair gearboxes after the country’s state media made complaints against them public, AP reported.