VW Down in Europe, Up in the US of A, but the Future is ELECTRIC!

There have been very few good headlines for Volkswagen of late, since they got caught out cheating with their emissions and fuel efficiency figures. VW’s UK car sales fell 9.84% in October compared to the same month last year, signalling a lost of consumer faith in the brand after the news of emissions rigging broke.

Sales of other brands under the VW Group, namely Skoda and SEAT, are also down, and the company reportedly attributes the poor sales to the damaging events that had unfolded in recent weeks. Audi, however, appears to be unaffected but in the wake of the scandal, there has been a general confusion amongst consumers, causing sales of some marques unrelated to VW, including Ford and Vauxhall, to also dip.

The VW Group’s 3.0-litre TDI engines have also been called into question by the EPA, but VW denies that the defeat device software was installed in those models. VW would want to keep the 3.0 TDI engine out of picture as it is found in large VW and Audi cars, and would also implicate some Porsche models as well.

Strangely, it is not all bad news for VW as sales in the United States of Americaland seem to be largely unaffected, despite regulators announcing that an extra 800,000 cars had been identified as using the cheat device. The carmaker sold 30,387 cars in October, a rise of 0.24% compared with the same month last year. In a statement, VW thanked its customers for "their patience and loyalty".

"Volkswagen is committed to making things right and actively working to restore trust," said Volkswagen America's chief operating officer Mark McNabb.

Sales of the company's Golf line increased 40.2% compared to October last year. To put things in perspective, however, other US car companies also reported double digit gains - GM rose 16% and sales of Ford rose 13% in October - but the increase must be welcome news for VW who lost its Top Global Automaker title to Toyota as a result of the scandal. The Jetta and the Beetle, though, both took hits with sales decreasing 41.5% and 34.1% respectively.

In the wake of the scandal and perhaps in an attempt to change the storyline, over in Germany, VW has already begun talking about their future strategy – which includes streamlining processes to reduce costs - and how electric vehicles are destined to become a major part of their future portfolio, with plans to develop modular platforms for electric cars. Dr Herbert Diess, the CEO for Volkswagen passenger cars, has announced big changes to future product plans, which revolves around "reorientation of the diesel strategy". We can expect to see a 'MEB Modular Toolkit', standardised electric and plug-in hybrid powertrains that will be implemented across the range.

According to Dr Diess, the next Phaeton, the brand's 'halo' car for technology, will be a pure electric luxury saloon, with "long-distance capability, connectivity and next-generation assistance systems". From this, the company will spawn a complete range of plug-ins and high-volume electric vehicles, with ranges of 185 miles and 48-volt mild hybrids.

What is the VW emissions scandal?

The dieselgate (as it is now being called) emissions scandal has escalated since the VW Group was caught cheating on its vehicle emissions tests. The automaker installed a ‘defeat device’ software algorithm in its cars which detects when the car is being tested, and actives full emissions control to make it appear cleaner than it really is.

Thus, VW diesel cars passed the strict US emissions limits in the laboratory, but in the real world, was spewing out Nitrogen Oxides (NOx) up to 40 times the accepted limit. The legal limits for NOx emissions in Europe are higher, and it is still uncertain whether the cars have broken the law there…although the same software is present in the cars across the pond.

image: Reuters via WSJ