Volkswagen Faces Mandatory Recall Of 2.4 Million Diesels In Germany

Updated on

The world’s largest carmaker is apparently in deep trouble as the diesel emissions scandal at Volkswagen continues to widen.

Related to this, on Thursday, Germany’s transport ministry ordered Volkswagen AG to undertake a mandatory recall of diesel models that have software designed to cheat on emissions tests. German Transport Minister Alexander Dobrindt said the recall will start in in 2016, and the car manufacturer must provide technical details on its solution to the problem by the end of November.

Gates Cap Management Reduces Risk After Rare Down Year

Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy Read More

Moreover, German media sources suggest the ministry rejected VW’s proposal for car owners to voluntarily bring their cars diesel vehicles in for the fix, and insisted on a mandatory recall.

In other news connected to the diesel emissions scandal, two senior execs have left the company, and Italian police raided Volkswagen offices in Verona and Lamborghini offices in Bologna to collect evidence in the expanding probe.

Of note, Germany’s federal motor transport authority will oversee the Volkswagen recall.

Developments in Volkswagen diesel emissions scandal

In a related development, one of the auto maker’s longest serving execs resigned in a dispute over organizational strategy, adding to the turmoil from the ever-expanding emissions scandal. Winfried Vahland, the 58-year-old head of the Skoda Auto business and soon to be CEO of a new VW group including its U.S., Canadian and Mexican operations, turned in his notice earlier this week.

It was also announced that Falko Rudolph, the chief of a Volkswagen components factory in Baunatal, Germany, had been suspended. Rudolph was chief of Volkswagen’s diesel-engine development from 2006 to 2010, and was referred to by Volkswagen insiders as the “father of the dual-clutch transmission”.

Rudolph was a member of the team of engineers that developed the EA 189 diesel engine at the heart of the VW emissions scandal. YThe company has admitted that it installed software that allowed it to cheat on emissions tests on close to 11 million diesel-powered cars.

To date, the investigation in the emissions scandal is focusing on a group of engineers in the Volkswagen R&D division and the diesel-engine development team. Including Rudolph, four senior Volkswagen execs have now been suspended relating to the investigation.

Subscribe to ValueWalk!

Get updates on the latest posts and more from ValueWalk straight to your inbox.