Emissions Readings for Volkswagen Cars: Discussion

The next item on the agenda is a meeting with representatives of Volkswagen Group Ireland and The Society of the Irish Motor Industry, SIMI. The purpose of this meeting is to engage with Volkswagen Group Ireland in respect of the discovery in the US of software being used by Volkswagen which gave rise to incorrect emissions readings, the likely implications for Irish motorists and what the company is doing to remedy the situation. SIMI is also in attendance to provide its views on the matter and the implications for the wider Irish motoring public. On behalf of the committee, I welcome from Volkswagen Group Ireland Mr. Lars Himmer, managing director, Mr. Patrick Comyn and Mr. Paul Burke. I also welcome from SIMI Mr. Alan Nolan, director general, Mr. Brian Cooke and Mr. Tom Cullen.

I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable. I also advise witnesses that submissions or opening statements they have submitted to the committee will published on the committee's website after the meeting.

Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

I invite Mr. Himmer to give his opening statement.

Mr. Lars Himmer

I thank the committee for giving me the opportunity to engage with it for what I know-----

The PowerPoint presentation is not up-----

Mr. Lars Himmer

We are not using PowerPoint. I have speaking notes, which have been circulated to the committee. I thank the committee for giving me the opportunity to engage with it for what I know is an important issue for it and the public. I am the managing director of Volkswagen Group Ireland. I am originally from Denmark and joined Volkswagen Group two years ago, having previously worked in a variety of other industries, including commercial vehicles. I took up my current role in Ireland in January 2015.

Volkswagen Group Ireland is the Irish importer and distributor of Audi, Seat, Skoda and Volkswagen passenger cars and commercial vehicles. We directly employ more than 140 direct staff in Ireland and our cars and vans are sold and serviced through a network of 155 dealerships and-or workshops in 75 locations around the country. These employ approximately 2,500 dedicated staff.

In my capacity as head of the business in Ireland, I would like to express my sincere apologies that our group has let down our customers, our dealers, our staff and the wider public in Ireland. The findings of irregularities in some diesel vehicles manufactured by Volkswagen Group are unacceptable, all the more so given our long history and the trust placed in us by successive generations of car owners here and internationally. These are matters that the board of management of Volkswagen AG and here in Ireland take very seriously. We recognise that we have fallen short of the standards expected of us and the standards that we expect of ourselves.

As a group, we accept that we mishandled these tests and we will fix this at our expense and in a way that minimises any disruption to our customers or other stakeholders. Beyond that, we recognise that we need to learn lessons from what has happened and to co-operate with regulators and policy-makers in this regard.

Also as a group, we are undergoing organisational structural change with a new CEO and have started a strategic product redirection - for example, a reorientation of our diesel strategy using only selective catalytic reduction with AdBlue and pushing our electric vehicle architecture.

Like most of the committee members, I first learned about emissions irregularities in the US on 19 September, and potentially in Europe on 22 September, with clarification in the following days. I will now turn to the specific issues as they relate to Ireland. On 1 October, I announced preliminary data about the local impact and about Volkswagen Ireland's response. This was that up to 80,000 vehicles sold by our company may be affected, that a further circa 30,000 imported vehicles may also be affected and that Volkswagen Group Ireland will take responsibility for these also. As previously indicated, the emissions issues relate to vehicles registered between 2008 and 2015 and containing a type EA 189 engine. Clarification of affected vehicles has been ongoing and the number today is 115,917.

I have also previously confirmed that the affected cars are technically safe and roadworthy and that there is no impact on handling and-or consumption. In terms of addressing the problem and engaging with our customers, I can confirm that all owners of affected vehicles are being contacted directly regarding the process to get their vehicles remedied in the near future. Individual letters to all owners have been sent this week. We have also set up a national website where Volkswagen customers can check if their vehicle is affected. For ease of use, we have correlated the vehicle identification numbers that we normally use as a car company with the vehicle registration numbers that the public is more familiar with. What that means is that drivers can check if their vehicle is affected by simply entering their car registration on our website www.campaigncheck.ie. This website has been very well received and has received more than 100,000 searches in its first week in operation, identifying more than 15,000 affected vehicles. In the second week, we identified more than 25,000 vehicles via the website.

On 7 October, Volkswagen AG presented its plan and technical solution to the German Federal Motor Transport Authority, KBA, for approval. Its decision was issued to Volkswagen on 15 October and includes, in particular, the following measures. An ordered recall is taking place. A timetable and plan of action submitted to the KBA is being implemented. Today, Volkswagen AG must present the technical solution for fixing the 2.0 litre engine to the authorities. On 15 November, Volkswagen AG will the present technical solution for fixing to the 1.6 litre engine to the authorities and by the end of November, it will present the technical solution for fixing the 1.2 litre engine to the authorities. It is important to state that vehicles can continue to be used on the roads without limitation and that the current EA 288, EU6, successor engine generation is not affected by the recall.

On 24 October, Volkswagen Group Ireland initiated a voluntary suspension of sales of unregistered cars and vans with the affected EA 189 engine. We are also assessing a wide range of options to ensure ease of implementation for our customers. These include accommodating times and venues that best suit our customers and ease of process for dealers to cope with the massive capacity needed. All our customers with these vehicles will be kept informed over the coming weeks and months. We want to do everything in our power to correct these vehicles and to begin the process of regaining trust. This company has built an excellent reputation in Ireland over more than 65 years.

Recent events have caused concern in the public's mind and we are now doing everything we can to rebuild trust with our customers, partners and the general public.

The remediation process should have no impact on CO2 emissio

ns in the future, as some have speculated, and we will provide technical proofs to corroborate this assurance in the period ahead. We take full responsibility for our actions and we are working with all relevant authorities in a co-operative way. I offer the commitment of Volkswagen Group Ireland to work with this committee to understand what happened and how we can move forward. We have not had the opportunity to review all aspects of this matter as the investigations are just beginning. My testimony, therefore, and my answers to questions will, by necessity, have to be considered preliminary and based on my best understanding at this time. Members can rest assured that I and my dedicated team here in Ireland will not stop until this issue is fully resolved.

Mr. Alan Nolan

Táimid an-bhuíoch don choiste don seans labhairt anseo thar cionn SIMI. The Society of the Irish Motor Industry, SIMI, is the national representative organisation for the motor industry in Ireland. The organisation has more than 1,100 members, covering all sectors of the motor industry including vehicle and parts importing, sales, repairs and servicing as well as other specialist support businesses from finance to IT providers.

The recovery over recent years has seen employment in the sector increase by almost 10,000 jobs to a current level of 45,000. The improvement in business this year will see the VRT and VAT collected for the Exchequer from car sales exceed €1 billion for the first time since before the recession. On the issue at the centre of today’s invitation, we are acutely aware of the seriousness of the situation for our sector. However, we cannot answer on behalf of the individual member concerned or comment on specific issues in so much as they relate only to a specific individual member company. It is clearly more appropriate that any such questions are addressed to our colleagues from Volkswagen Group Ireland, VWGI. We are happy to deal with the more general issues and principles from an industry viewpoint. In this regard there is no evidence that there is a similar NOx issue in relation to any other companies.

We do not manufacture any vehicles in Ireland so we are not directly involved in the type approval of new vehicles at the manufacturing stage or in emissions testing under the EU directive. These are, however, key issues for us in Ireland as we have such a strong environmental focus as a country. The motor industry in Ireland has been very strongly supportive of the environmental agenda and we are aware that the future for private car transport needs to be as sustainable as possible. In Europe, the focus in relation to emissions has been principally on CO2 as fears over climate change and Kyoto targets focused on the need to reduce CO2 from road transport. Our vehicle registration tax, VRT, and road tax rates are also based on the CO2 emissions figures rather than the NOx emissions which are at issue here.

The issues raised here and the focus on how CO2 and NOx emissions are tested in Europe have strongly centred the debate on the difference between the type approval laboratory tests and actual results in real world driving as experienced by consumers. The EU and the motor industry at European level have been working for some years to change over to real driving emissions, RDE, testing and the current debate will speed up delivery of that project as it is now a matter of urgency. This is targeted to begin in September 2017 and these RDE tests will produce figures that will be far closer to what consumers experience when they drive on the roads. This is a phased project which will implement further stronger emissions targets over a number of years after that. It is likely that the final detail on these new requirements will be confirmed by the EU before the end of the year. Consumers will see huge improvements in the real world accuracy of emissions and fuel consumption data over the next couple of years.

I thank Mr. Nolan for his presentation and for keeping us updated on what his organisation is doing. All of us have been approached in the past couple of weeks about the initial confusion before Volkswagen came out with its statements. I received an e-mail from a company which has a fleet of vehicles and it was wondering what arrangements for compensation there were, on account of the fact that it had to take the vehicles off the road and the vehicles suffered a reduction in resale value. It had gone for an environmental ISO to comply with the quality required for transport but this has thrown all that into chaos. They are saying that this fleet of vehicles has damaged the company's credibility. Will this loss of value be made up to the company? Will there be reductions on new vehicles if they have to be replaced?

Mr. Nolan said there was no evidence that other companies are affected by this. Have other companies said clearly that there is no issue or is it just that there is no evidence for it at the moment?

Mr. Alan Nolan

They have said there is not an issue.

So it is just confined to Volkswagen.

Mr. Lars Himmer

It is extremely important for us to restore trust and that certainly applies to the customer mentioned by the Chairman. It is a very new issue and we are focused on finding a technical solution to bring the cars into the condition that is needed. We expect the technical solution to apply to 50% of engines. In 52% of the engines in Ireland software is the issue while in the other 48% the issue is potentially both software and some hardware. The operations should take approximately an hour for software, with extra time for the hardware later on. Time off the road should be absolutely minimal. Many customers will come in to service their cars anyway and it will be natural to carry out the update of the engine at that time. We will make certain that we can accommodate customers and we will be in contact with fleet owners with a view to doing this on their premises. We will be very flexible and will ensure there is minimal inconvenience as soon as we have the solution. The solution should not have an impact on CO2 and should not impact mpg or the performance of the car. There should, therefore, be no difference in residual value. It is very early days and we are tracking residual values. We will take full responsibility but we need to base our approach on facts and to make sure that we fix these cars. That is our priority at the moment.

If there is a loss of earnings for particular companies with a full fleet will that be dealt with on a one-off basis?

Mr. Lars Himmer

I cannot say, but we will take full responsibility. Customers and companies are very well protected in Ireland. We have been in Ireland for 65 years and have a proud history here. We have a very professional dealer network with which we work very closely and we will do everything we can to cause as little inconvenience as possible to customers and to bring back the confidence that our cars are fundamentally good. We need to get them on the road so that they can live up to their reputation. I can say no more than that we will take full responsibility.

How does Volkswagen intend to compensate the injured party?

Mr. Lars Himmer

I am sorry, I do not understand.

I will repeat the question. How does Volkswagen intend to compensate the injured party?

Mr. Lars Himmer

We will live up to our responsibilities, so that will be a legal question.

Has Volkswagen identified who the injured party is in this instance?

Mr. Lars Himmer

No. I am not a lawyer so I do not fully understand the question.

Mr. Himmer is the chief executive of Volkswagen Ireland. Who does Mr. Himmer think has been injured in this particular debacle?

Mr. Lars Himmer

I think trust has been broken. We have an issue with the cars and with software that should not have been there. That will be recoded and the cars will be brought back into the condition in which they need to be.

So Mr. Himmer is saying that the car is the injured party.

On behalf of Volkswagen, who does Mr. Himmer believe is the injured party in this particular debacle?

Mr. Lars Himmer

We will have to see what actually comes out of the case before we identify the injured party.

That does not make any sense. Who is the injured party from Mr. Himmer's point of view? When he gets up in the morning, whom does he seek to address in terms of the damage that has been done? Who is his target? Is it the car and just fixing the car? Who is the injured party?

Mr. Lars Himmer

The target is to fix the car and to restore the trust of the customers. There are a lot of investigations going on.

That is about restoring the trust for Volkswagen, but Volkswagen is not the injured party from my perspective. I will ask Mr. Himmer the question again. Who does he think is the injured party and how does he intend to address that?

Mr. Lars Himmer

At the moment, we are focused on finding a solution to the problem and restating that we will live up to our full responsibility.

We will go back into it. What is the problem? What does Mr. Himmer think the problem is?

Mr. Lars Himmer

The problem is that we have a fault in the car. There was software coding on the test bench that should not have been there. That is being investigated. It is important for us to find out why and how that happened. We are as interested as anyone else in finding that out and in making certain it does not happen again. That is part of the investigation, both the external investigation and also an investigation that we have initiated with external lawyers to make certain that no stone is left unturned in finding out how this has happened. It is important in restoring trust.

With respect, from my perspective, that is a wasted exercise. It should be as plain as day what happened and why it happened. Volkswagen had an engine that did not meet the standards and somebody within the organisation decided to manipulate test results through the electronic components. That has been established. How Volkswagen manages its business behind the scenes in terms of the reputational damage that has been done to Volkswagen is an issue for Volkswagen. Get on with it. Do not expect a clap on the back for initiating all that investigation to improve the shareholder value.

There are a number of injured parties here. First, there are the people who went out and spent their money on a Volkswagen car, who believed in the brand and are now at a significant loss. The resale value of the cars is questionable. Another injured party is the environment, which affects all of us, whether we are Volkswagen owners, Audi owners, or owners of any other car. We have all been affected by Volkswagen's wilful neglect of standards, which has an impact on the environment. Let us get real here. Those are the injured parties. This is not personal, but on behalf of his organisation, Mr. Himmer should start to figure out how Volkswagen will resolve that issue, as opposed to how it will regain the trust of consumers so that they will continue to buy its brand and continue to look after the people who work in Volkswagen. That is not where Mr. Himmer should start from.

There is a further point. Mr. Himmer said in the course of his comments that he discovered, as the rest of us did, on 19 September 2015 that there was an issue with US emissions. He went on to say that on 22 September 2015 it became clear that there were issues in Europe, yet he did not suspend sales of the vehicle until 14 October 2015. There is another injured party. Those cars were not taken out of circulation. Mr. Himmer should have contacted those who bought vehicles between the date he became aware of the problem and the date on which he suspended sales to offer them their money back and let them decide what they wanted to do.

Mr. Himmer will not answer the question, but I will ask it again. Has any thought been put into how Volkswagen intends to address the very significant damage that has been done to the stakeholders, namely, the affected owners and the State, on behalf of its citizens, because of the impact on the environment? I get the impression that no thought has been put into it. It is easy for Volkswagen to say it is sorry and that it regrets what has happened. That is all good, but it is PR spin. It is straight from a PR textbook - when one is caught, one should put one's hands up and try to mitigate the damage rather than truthfully addressing the core of the problem. I do not get the impression from anything I have heard from Mr. Himmer or his counterparts in the United States and the UK that, as a corporate body, Volkswagen has any interest in addressing the core of this issue. It is a "cover thy butt" exercise that is going on. I do not think it is acceptable. It is a wasted exercise to have the witnesses come in.

Has Mr. Nolan sought any kind of guarantee or binding statement from suppliers or other manufacturers? Has he received documentation to say that they have carried out a full review of all their procedures and processes to ensure that nothing like this is happening with any other make of car?

We will do it in order. I will come back to Mr. Himmer, if he wants to reply, and then we will go to Mr. Nolan.

Mr. Lars Himmer

I can assure the Deputy that we take all injured parties very seriously, but it is very early days. We have already made financial allocations to pay compensation. That was done in the early days in September after we became aware of it. We are looking at the impact of it, which is very important to establish injury. That will also depend on our getting the car back to where it needs to be. Again, we will work intensively on the test bench to get the car into the condition that it needs to be in. We will not shy away from responsibility. We have been in Ireland for 65 years. We have no intention of running away from our responsibilities. I hope we will be here for at least another 65 years. We will co-operate, we are co-operating and we will get to the bottom of it.

Will Volkswagen compensate owners for loss of income on the loss of value of the car?

Mr. Lars Himmer

We will address this when we see that there has been an impact. I cannot guarantee that we can compensate everything in every direction, but we will live up to our responsibility. We are not running away. I and my team will work very hard to fix this. We will not run away while we do that. Our investigations are ongoing and when we learn more about what and how it happened I am certain that we will have these discussions again. I reassure the committee that we will live up to our responsibilities.

Some markets suspended sales of vehicles on 13 September 2015 and in the days afterwards. Many markets did not, and some are still selling. We looked at it carefully every day. The cars are still technically safe and roadworthy. Type approval is in place on the condition that we fix these cars. It is important to say that we still have type approval but we have to fix the cars. We suspended sales on 14 September. To put it into perspective, in Ireland, four cars and 12 vans were delivered unregistered between 1 October and 14 October 2015.

Mr. Alan Nolan

Not only did we receive confirmation from our distribution companies in Ireland, but we actually travelled to Brussels to meet with ACEA, which is the European association of vehicle manufacturers. It has a huge amount of research capability and it is currently engaged in dealing with this issue on behalf of all European-based manufacturers with the European Commission. It is also dealing with the next round of negotiations on emissions testing. It has confirmed to us that all the manufacturers have confirmed that they have no issues.

I thank Mr. Himmer from Volkswagen and those from SIMI for coming before the committee. Mr. Himmer told Deputy Dooley that this was a software coding problem. It seems to me that it was not a mistake, and that it was deliberately rigged in such a way as to give the impression that the emission regulations were being met when they actually were not. That is how it appears to me. Was this software developed in-house by Volkswagen or by a software company outside Volkswagen, which may have supplied other car manufacturers with the same kind of system?

Could this problem affect other car manufacturers in Europe or worldwide? It seems to me that it borders on something criminal. If somebody deliberately rigs a system to get around a safety and emissions system, it appears criminal. We need to know who was responsible for the software coding. It obviously comes down to some individual or software engineer. Do we know who that person is and, if so, what action is being taken to deal with that problem? A family member of mine works full-time in the motor industry. There are all kinds of implications for the credibility of different companies. Everybody has held Volkswagen in very high regard for many years and suddenly, out of the blue, we hear of this problem. People are asking whether this problem is affecting other models of car manufacturers. I would like to get specific answers to those questions.

Mr. Lars Himmer

Who did it is still an open question. The Volkswagen board and the management board of our company have said we will co-operate fully because we want to find out as well the who, why and how. These are fundamental questions and we have the same interest in finding answers. Knowing that would enable us to ensure it does not happen again and also how to move forward. We do not have a name today. The investigations are ongoing. They are ongoing with a legal company that is looking internally and also at authorities. I do not have any insights on how that is going or how much progress has been made or if that investigation will be finished at a certain point but I hope it will come quickly and that we get those answers. The public needs it, the committee needs it and we need it as well. My understanding is that it is internal software. I do not know of others being involved.

I would like to add a little to help understand the complexity of the case. Three different engines are impacted out of a total of approximately 11 million - three engines of 1.2 litre, 1.6 litre and 2 litres. There is different software from different suppliers on the three engines. Each engine is delivered to five different brands. Each engine has different transmission systems. The variations are very high. The complexity is high. It is not a box that is put on the car on-off switch. It is something that is in the software that makes it difficult. Unfortunately, that is why today we do not have the full solution for all of them but it is the solution that is coming engine by engine.

I do not have any comments about the industry. I have no reason to believe it did it.

Mr. Himmer mentioned different software suppliers for different types of engines. I think he said earlier that the software was developed internally in Volkswagen but then he said there were different software suppliers involved. I am not clear as to where exactly this problem originated.

Mr. Lars Himmer

Neither am I. The base software that is on the engines comes from three different suppliers.

Three different suppliers.

Mr. Lars Himmer

That is then adapted by Volkswagen group. The investigations will show where that was.

Did these three software suppliers supply software to other car manufacturers what we know of?

Mr. Lars Himmer

I do not know who supplies to which companies.

We do not know whether this problem is universal to other car manufacturers or just confined to Volkswagen.

Mr. Alan Nolan

The motor industry is structured in a way that engine designs and software can be utilised by a number of manufacturers. That is the reason we and ACEA, knowing there is common use of certain designs in the industry, asked whether anybody else had this particular type of software aimed at reducing the NOX during a test. The answer was "no", nobody else has that in operation.

As stated, no cars are manufactured in Ireland. We do not know what is happening internationally.

Mr. Alan Nolan

That information is coming from ACEA, the association of vehicle manufacturers based in Europe, so it is a fairly strong authority.

I thank Mr. Himmer and Mr. Nolan for their presentation. The first reaction of most people to this issue has been the scale of the problem, not only here but across the Continent. The reason this continued from 2009 and was only discovered in 2015 is difficult for anybody to understand. If the problem is confined to the EA189 engine and there are three different versions of it and if it is down to the electronic monitoring, there is obviously a problem with the engine. If that is the case, can it be fixed? Is it a case that no matter what one does, the emissions from that engine will be a problem? From a technical view, even if one installs electronics, will that solve the problem and will it meet the standards not only here but in other European countries? Outside of the reputational damage to the company, there are other implications in terms of motor tax in other countries. There will also be implications for national car test centres as to why this was not detected. I gather the problem was not detected until the vehicle was in operation. If the electronics can fool NCT centres, there is an issue that needs to be addressed. I do not know whether that will have legal implications. In most countries there may be issues in terms of people who paid taxes and so on.

Have the witnesses noticed much of a change in the industry? Has this issue had a big effect on sales? Are we seeing a massive drop in sales? I am curious as to whether this will lead to job losses over a period. At the moment I can imagine many people are worried about their Volkswagen vehicles, their resale and the effects on the environment. Mr. Himmer said that approximately 110,000 vehicles are affected - 80,000 in Ireland and 30,000 imports, whether cars or other vehicles. Euro 6 has stated that, in general, nine out of ten cars exceed the limits. Is it the witnesses' goal to get the limits down to Euro 6 levels although it does not appear as if that would be possible?

I was a technician by trade before becoming a politician so I understand a good deal about the electronics. One can put stuff in electronically but so far as I can see, the actual engine is the issue. Perhaps the witnesses would comment on some of those questions.

Mr. Lars Himmer

The Deputy has asked several questions. I will try to take them in order.

As to whether they will meet standards, they must. I am certain they will also be rigorously inspected and that the affected vehicles will be obliged to meet those standards. Today, Volkswagen is presenting to the German Federal Motor Transport Authority, which issues the type approval in Europe, our solution for the 2.0 litre engine and over the coming weeks, that authority will look carefully at it. It is important that it be both validated and approved before we then start to implement this solution in cars. Making this right should also then mean there should be no impact on CO2, for instance, and then on motor tax in Ireland.

A concern was expressed about job losses. From a group perspective, this, of course, has been communicated as a disaster for the Volkswagen group. There have been announcements that we must cut costs. We already needed to do that, and this has been intensified. We are reviewing carefully our investments but from an Irish perspective, I mentioned I have 140 dedicated fantastic colleagues in Dublin and approximately 2,500 colleagues working with the brands at dealerships throughout the country. From a local market perspective, we must review some of the investments we are doing here but as an importer, they are relatively limited in the motor industry. I envisage more rather than less work in the future, as 115,000 cars need to be remedied in the next year. That is a lot of work. It will be done by us as an importer co-ordinating it, communicating with customers and making it as efficient a management process as we can for everybody. It will be our colleagues in the dealer network who will do the work and that will involve more work over the coming year. It will be a lot of work that will entail talking with customers to the effect that their car is getting the right solution, is back on the road and is good. Consequently, from a local perspective, I foresee very limited risk and actually see the opposite in the short term. Ultimately, it will depend on Volkswagen fixing this and setting it straight.

Mr. Alan Nolan

If I might just answer on the general principles, this is one issue in moving to real driving emissions. Moreover, we in the motor industry in Ireland take on board all the things said about credibility as from our point of view, it is hugely important across the entire industry. When one looks at the current laboratory-based testing regime, it has been in place since the late 1980s and so is 35 years old. Cars were very different then and what is fitted to cars now is very different. The problem is it was set as a consistency test to make sure each manufacturer would do precisely the same thing. Consequently, while the comparison was good, it did not reflect what actually happened in the real world. As a result, the fact that when one drives the car it has different emissions than in that test is just a factor of the type of test it is. We cannot wait for it to move to real driving emissions because we are buyers of the technology in Ireland. As we do not make them, we can choose the very best. From our point of view, such a test will involve a portable laboratory, if one likes, towed behind a vehicle to actually measure it as it is driving along. The reason it will take time - that is, until 2017 to deliver it - is to make sure the test cycle is identical for each manufacturer for each vehicle to make sure they are completely consistent. However, when one considers the national car test, NCT, the problem is we do not currently test for NOx emissions at these periodic tests. It is not part of the European requirement but this current debate might well change that.

Are there tax implications?

Mr. Alan Nolan

In general, the tax is based on the type approval document, which carries the type approval measure on CO2 emissions and on CO2 only. Consequently, provided the cars are within this measure - that is why this debate at European level is about the approval document and making sure the vehicles actually match what was carried in the approval - it should have no implications for people.

I thank the witnesses for their attendance and note Mr. Himmer, in particular, has a very difficult job here. He is answering questions because of something that someone in an office or laboratory far away decided to do. I acknowledge his role here today is very much as the messenger and I certainly do not wish to shoot the messenger but there are questions I must ask. One in particular concerns the removal of software or hardware. What impact will this have on every aspect of the performance of the vehicles affected? Can Mr. Himmer provide information in this regard? In addition, I refer to an important point for Volkswagen customers. While it may be a worldwide phenomenon, I have found Irish people in particular to be loyal to their make of car. If they get a good one, many people will try to stick with the car brand that has served them well. In particular, I have found this to be the case in respect of Volkswagen drivers. I know many such drivers who are on their tenth or 15th Volkswagen and these are the people for whom I really feel sorry. They feel let down and unsure. Many people who buy Volkswagen cars do so because they know they will get a good price for it when selling it on, all going well. Many of my constituents have asked me what impact this will have on resale value and Mr. Himmer must try to elaborate on this point.

My final question pertains to something that is paramount for anybody who is purchasing a car. This might sound like a stupid question but is there a safety implication arising from the removal of the aforementioned pieces of hardware and software? Is there a safety implication arising from any stage of the scandal about which drivers of Volkswagen cars or the other cars affected must be concerned?

Mr. Lars Himmer

It is special being in Ireland and in particular, working with Volkswagen. I recognised that as soon as I came here. As to exactly what will change, it is only what we are presenting at the moment but we undoubtedly are doing everything in order that there will be no change in respect of CO2 emissions, fuel consumption or performance. Were there to be, then we would be obliged to address it but there should not be. Consequently, I will not speculate and reiterate everything is being done to make certain it is meeting all the standards. When it meets all the standards, there also should be no difference in the residual value. We are monitoring this carefully not just in Ireland but even more so in other markets where we have a higher volume and better data points and we see very little impact. If one looks back on the history of recalls of our vehicles or those of others as an industry, while there might be minor beeps, they often settle very quickly as well. It really is about how we manage the next months and how we address the uncertainty that exists at present as we have the solutions. It will depend on that. On safety, there is no safety issue. We still have the type approval in place and the cars are safe to drive. They are roadworthy, there is no issue.

On performance, Mr. Himmer is fully confident that performance will not be affected in any way.

Mr. Lars Himmer

Performance should not be affected.

I have a final question on health. When the devices were removed, some of the emissions were measured at more than 40 times the standard in the United States. In respect of safety, particularly in built-up areas, has Volkswagen, either internationally or here in Ireland, initiated research into the possible impacts on general public health and on the drivers of the vehicles themselves? Mr. Himmer might picture the scenario in which one is sitting in traffic for 30 minutes or an hour in a vehicle emitting 40 times the standard amounts. Has there been initiation of research on that front?

Mr. Lars Himmer

I might start by noting the Deputy mentioned the United States, where the regulations and the manner in which the tests are run are very different from the position in the European Union. If one considers NOx, which is the matter at hand here, the level for the current Euro 6 regulation in Europe is 80 milligrams per kilometre, whereas in the United States, it is 31 milligrams per kilometre only. Consequently, it is 2.5 times stricter in the United States. In addition, the software is effective in the test and what has been addressed at this meeting through The Society of the Irish Motor Industry, SIMI, is that the way we run the test today in Europe, through the new European driving cycle, NEDC, is increasingly different from what happens in real life. What needs to be done in the plan for 2017 is really to bring in real-life driving and real-life testing, which could answer some of the Deputy's questions, in order that there would not be this difference.

One of the figures I read is that the additional emissions as a result of the scandal equate to the entire carbon output of the UK for one year. The figures are not small, and the general impact needs to be at the forefront in terms of research and atoning for this.

Mr. Lars Himmer

I have not seen those figures. We are discussing NOx emissions. I cannot comment on that.

I think Mr. Himmer for the presentation. I presume the cars with 1.2 litre, 1.6 litre and 2 litre engines are all diesel cars.

Mr. Lars Himmer

Yes. Others are not affected at all.

Am I correct in saying that in 2009, Volkswagen changed the emissions? Does this mean that the emissions from a car built now are the same as those from a car that was built in 2008, because this did not work, or are they greater now? Is it true that Volkswagen has now stopped selling all of its vehicles, including Transporter vans, Caddies and so on, in Ireland? Is there a plan for dealers who live on the turnover from selling such vehicles? Their income will decrease massively.

As with many other vehicles down through the years, modification is an issue. Software and hardware were mentioned. What hardware does Volkswagen use? Are liners or pistons changed? Are intercepter boxes installed, or has the problem been solved? The problem does not affect the ability to drive a car or its day-to-day running. Rather, we are focused on emissions.

I note with interest that when cars go for the NCT they are revved up to check emissions - they get a fairly good revving in Ireland. How were cars able to beat the machine? Reference was made to NOx and other emissions. I am open to correction, but I understood the presentation stated that when driving on the road the emissions were greater than when a car was standing or being revved. Was there a block box or hardware stopping emissions from being detected when cars were standing?

Mr. Lars Himmer

We no longer deliver vehicles that are affected or are part of the recall. There are a number of vehicles in Ireland and a few are still on their way; they are at our compound. We have withdrawn the birth certificates for these vehicles so they cannot be registered. As of today, we have suspended the sales of approximately 450 vehicles in Ireland. It is also important to say that any vehicle now going into a dealership-----

I apologise for interrupting. Are most Volkswagen cars and vans at a standstill?

Mr. Lars Himmer

No, not at all. A very minor amount are standing still. Some 115,917 vehicles are affected, including the ones standing still, and a service campaign is required. That will be done and we have the timeframe for it, which is approved with the type approval authority. We have to go up to that and, with that commitment, also acknowledge that the cars are fit to drive.

We are in very close communication with our dealers, which has been the case for many years. We are in even closer contact now to see how the situation is developing because it is having an impact on them. We also need to work very closely together to make certain that we can handle a campaign involving 115,000 cars next year. It is a very large number. As soon as we know what the full solution will be, such as whether one or two hours of software updates are required, we will inform dealers. Of the hardware in question, the main issue is the injector. We will then know exactly what capacity is needed, and we are working that out with dealers.

So what Mr. Himmer is saying is that Volkswagen will have to modify the injectors or install different ones?

Mr. Lars Himmer

Yes. It is a technical solution which we need to present in the middle of November, but it looks like it will involve software and most likely a change of injector.

Bosch injectors were used. Are they a problem?

Mr. Lars Himmer

I do not know. I am not a technician in that sense. On the question on Irish revving or whether there is a black box------

I referred to cars going for an NCT.

Mr. Lars Himmer

The test that is conducted is not done in the NCT. Rather, it is done when we get the type approval. It is done by the national authority.

Mr. Himmer is missing my point. How were the cars able to con NCT machines in Ireland when they were revved to check the emissions? The problem appears to have started in 2009, and once a car is two or three years old, it has to be tested. Emissions testing for cars involves the use of spec sheets to test standards. How were cars able to fool the emissions machines here?

Mr. Lars Himmer

I do not think they did. I am not a specialist in the NCT, but maybe Mr. Nolan can comment.

Mr. Alan Nolan

I can help Mr. Himmer with that. The NCT does not check for NOx. It is not part of the European testing requirement. It tests for CO2, soot and other things. These discussions may change that.

I do not want to downplay NOx emissions and the health issues attached to them. As an industry, we need to find solutions. Research in Europe would suggest that NOx output from the car fleet has reduced by 40% or 50% over a period of about ten or 15 years, at a time when the number of cars has increased by the same number. The situation has improved. In Ireland there have been no issues because we are quite an empty country, other than, I understand, once during 2009 when EPA research showed we came close to having NOx issues. It only affected small areas. I am not downplaying the issue, but because we are a large open country it is not as much of an issue. In 2009 we were at the lowest point of the recession, and the problem had more to do with a lack of maintenance on vehicles, which has an impact, as well as weather conditions.

I am sorry I was not here earlier, but I received the presentation. I welcome the witnesses. I have to declare an interest - I drive an Audi diesel car. Would the witnesses not agree that the confidence of the consumer base has been shaken as a result of this?

Over the past decade, the issue of carbon emissions was centre stage and the public perception was that the motor industry in general was resisting improving and reducing carbon emissions, particularly when EU legislation was proposed. At the same time, the motor industry and Volkswagen promoted the view that it was attempting to make diesel more acceptable. As we all know, diesel is a dirty fuel, but it made diesel more acceptable and improved it performance-wise. It has certainly improved since the first diesel vehicle I purchased. At the same time, it claimed that carbon emissions were being reduced. At that time, Volkswagen had a technician or group of technicians beavering away in Wolfsburg trying to defy the emissions issue. Quite frankly, Volkswagen should be ashamed of itself for doing that. Will heads roll? The witnesses addressed the question of the ongoing investigation earlier. How long does it take to investigate something in a company as large as Volkswagen? Who was responsible for this? Was it one individual or a research team operating within the structure? I am not familiar with the company's structure, but was it a team?

I presume that it was as I doubt that this was just one software engineer unless he or she had a eureka moment and found a way to get around the emissions regulations. Someone somewhere along the chain had to approve this. As such, the entire company is under question, not just those people.

I suggest that the sooner Volkswagen gets this out into the open, the better for the company. It seems strange that it is taking so long for Volkswagen to identify the culprit or culprits and determine how it happened. It was very clever. The software was so sophisticated that it did not activate until it sensed that the car was being tested while, under normal driving conditions, it made no difference.

What Volkswagen has done is disgraceful. Will this have an adverse financial effect on the company? Is it possible that Volkswagen could go under? Although Volkswagen has presented €6.5 billion to address the problem, every day there are indications that it is much larger than was recognised on day one. Are there discussions within the company of a loss? Mr. Himmer indicated that there had not been much of a loss in sales, but public confidence has been shattered.

To Mr. Himmer's colleagues from SIMI, should I now be changing from diesel and considering petrol? We do not seem to be able to trust the motor industry to make the improvements it has been claiming. Sentiment seems to be against diesel now because it is a dirty fuel. Is this having an impact? What is SIMI's views on consumer resistance developing towards diesel? I am beginning to revise my opinion on whether to switch even though I have been driving diesel cars for 15 years. I used to drive liquefied petroleum gas cars.

Will Volkswagen grasp the important issue of carbon emissions? Given its sophisticated structures and the expertise it has at its disposal, can we hope to expect news from Volkswagen that not only has it addressed this problem but also that it has further eliminated carbon emissions from its cars? Is this part of the company's mission statement? I am not trying to be hostile. I am only trying to reflect a consumer view. This is the opportunity to do that. I like Audi cars and am on my third, but Volkswagen has undermined public confidence. The people involved must be identified publicly, fired and maybe subjected to criminal charges, although that last is not an issue for Mr. Himmer or me. I urge Volkswagen to resolve this matter as quickly as possible and not to prevaricate.

Does Deputy Harrington wish to ask a brief question?

Yes, and I apologise as I had to attend something else. If I ask a question or two-----

I will stop the Deputy.

Indeed. This is a global deception and many people have been affected for different reasons. Many were customers of the Volkswagen group given the lower emission levels advertised for its vehicles and that environmental issues were an important consideration when purchasing. Ireland has a taxation regime that is based on low emissions. It has been compromised. I am a customer of the group. My car is not affected because it is an older vehicle and I pay a higher rate of tax on it based on its stated emissions, as many do. However, there are those who pay less and the State gets a smaller tax take because of the group's declared emissions. Have the implications of this been addressed and quantified by the group in partnership with the State or another agency? Has work begun on determining how the emission figures will impact on the Exchequer, the customer and the group? What other EU countries have similar emissions-based taxation systems? Has that issue been quantified? I hope Mr. Himmer will tell us that work has begun as there is a great deal more to be done as regards the emissions figures that this State must regularly audit and present to the Commission. This will have major implications for the State.

There will also be issues for the markets and business confidence in this and most countries where the group operates as well as for the group's companies and their staff, both those who are directly employed by those companies and those who are indirectly employed throughout the country and whose business depends on sales that are based on the group's supposedly genuine information. Has Volkswagen conducted a study of this impact? The implications arise from a deception that was meant to gain a competitive edge over other manufacturers. That stance is unjustifiable.

Mr. Lars Himmer

If I may combine a couple of the comments, I agree that the sooner we find out what happened, who did what and why they did it, the better. We all ask that question - consumers, the public and employees - and look for those answers. I hope that they come quickly, but I do not have a date for them. It is also important that we not jump to conclusions. We want to find the right people and understand the reasons.

Taxation in Ireland and many other European countries has been focused on carbon dioxide whereas the software in the engines addressed nitrogen oxide, NOx, which is not related to taxation. Distinguishing between the two is important. We are committed to lowering CO2 emissions further. Diesel is more efficient than petrol, which pays when one has a higher mileage. Our new management team and CEO have stated that we will only develop diesel engines with selective catalytic reduction, SCR, and AdBlue, which is cleaner. We will also focus more aggressively on our electrical vehicles.

Wolfsburg, the home of Volkswagen, is a special place. Its factory is interesting. Along the assembly line, different models have the same platform. One can see a Golf that comes as a petrol, the next Golf along the line is a diesel, the next uses compressed natural gas, CNG, the next is a plug-in hybrid and the next is electrical. We want to push emissions down and we have the different technologies and vehicles to do it.

The software update should have no impact on CO2. Therefore, there should be no tax implications.

Did Mr. Himmer or anyone else at Volkswagen Ireland know about the global scandal before the news broke?

Mr. Lars Himmer

None whatsoever.

No one at Volkswagen Ireland was aware that something unethical was happening.

Mr. Lars Himmer

No.

Can Mr. Himmer stand over that statement categorically?

Mr. Lars Himmer

Yes.

On behalf of the committee, I thank Mr. Himmer, Mr. Comyn, Mr. Burke, Mr. Nolan, Mr. Cooke and Mr. Cullen for attending and outlining their responses to this difficult situation. This is a major and ongoing issue. It is in the interests of the customers, dealers, Volkswagen and SIMI that this be addressed very quickly.

Mr. Himmer rightly stated loss of value and compensation had to be based on facts. It is important, when the facts are established, that the issues of compensation, the resale value and fleet owners about which we talked about are met upfront. There should only be winners in this regard. That includes customers, dealers and Volkswagen. I ask Mr. Himmer to inform the committee of developments as soon as possible.

Mr. Lars Himmer

I will.

I thank Mr. Himmer.

The joint committee adjourned at 12.50 p.m. until 11 a.m. on Wednesday, 28 October 2015. .