Consumer group hits VW over diesel sales, VW calls actions 'a campaign of misinformation'

Consumer group hits VW over diesel sales, VW calls actions 'a campaign of misinformation'

July 30th, 2018 by Mike Pare in Local Regional News

Volkswagen employees work around a car on the assembly line at the plant in Chattanooga. The automaker employs about 3,500 people at the factory.

Photo by Erin O. Smith /Times Free Press.

NOTABLE QUOTES

* "There was an agreement that [the VW vehicles] would be maintained. VW claims they are, but we haven't seen anything concrete." — Gerard Scimeca, vice president of Consumer Action for a Strong Economy


* "This campaign misrepresents the terms of Volkswagen's settlements with the U.S. authorities and is full of falsehoods." — Robert J. Giuffra Jr., attorney for VW

A consumer group is chastising Volkswagen's efforts to return to the marketplace many of the vehicles it bought back in the wake of the diesel emission scandal.

But the automaker is fighting back with an attorney, saying an Egyptian businessman is trying to stir the criticism and pressure payment from VW in an unrelated dispute, terming it "attempted coercion."

Arlington, Virginia-based Consumer Action for a Strong Economy, or CASE, said the German automaker wants to "dump" on the market hundreds of thousands of vehicles the company bought back from motorists after the diesel scandal.

Gerard Scimeca, CASE's vice president and co-founder, said there are lots of questions about the vehicles, such as whether there's verification they've been properly fixed.

"We're not sure where the vehicles are located. We're not sure what the maintenance record is," he said. "There was an agreement that they would be maintained. VW claims they are, but we haven't seen anything concrete."

BY THE NUMBERS

› $23 billion: Amount VW is paying in court-ordered consumer, federal and state settlement agreements due to diesel emissions scandal

› 495,000: Number of affected vehicles to date VW bought back, restricted or on which it has performed fixes

› 5: Years VW must conduct in-use testing on modified vehicles, invite EPB and California regulators to observe testing and submit results

Source: Volkswagen

Scimeca said VW is sitting on unsold vehicles with a street value of $7 billion.

According to VW, the company has bought back, restricted or performed modifications on more than 495,000 affected diesel vehicles to date through its settlement programs with the U.S. government.

In accordance with court-approved agreements, the vehicles are stored at facilities on an interim basis and routinely maintained to ensure long-term operability and quality so that they may be lawfully returned to commerce once they've received an approved emissions modification, said Volkswagen of America spokesman Mike Tolbert.

Chattanooga's VW plant site along with a pair of locations in Walker County, Georgia, are among many where the automaker is temporarily storing the vehicles.

"As these vehicles are released back into the market, we are consciously balancing supply and demand through our network of Volkswagen dealerships, so as not to create a surplus," Tolbert said. "Vehicles that are not modified because of their age or condition or for other reasons will be responsibly recycled."

'Pressure campaign'

Also, a VW lawyer earlier this month sent a letter to two members of the U.S. House Committee on Science, Space and Technology complaining that the panel's recent interest in VW is a result of a pressure campaign by Mohamed Shafik Gabr, the businessman in Egypt. In April, the committee had sent a letter to VW Chief Executive Officer Herbert Diess, saying the panel was conducting an investigation into ongoing allegations that VW "continues to circumvent global emissions requirements."

In VW's response letter to the committee obtained by the Times Free Press, attorney Robert J. Giuffra Jr. said Gabr wants VW to pay him "an unreasonable amount to settle a commercial dispute in Egypt" involving Skoda, a subsidiary of the automaker.

Giuffra said Gabr is chairman and managing director of a private conglomerate that was Skoda's longtime distribution partner in Egypt until late 2016. That's when Skoda ended the relationship after providing proper notice of termination because the conglomerate wouldn't sign a standard importer agreement, Giuffra said.

Gabr sued Skoda in Egypt and retained three U.S. lobbying firms to try to influence members of Congress and the media through "misleading online op-ed articles and television ads," Giuffra said. Earlier this week, a full-page ad from CASE ran in the Times Free Press and TV ads were shown to viewers locally.

"This campaign misrepresents the terms of Volkswagen's settlements with the U.S. authorities and is full of falsehoods," the attorney said in the letter. "We are aware from multiple sources that Mr. Gabr has openly boasted that he is manipulating actions in Congress against Volkswagen."

In addition, the letter said VW believes Gabr and his conglomerate are behind "TV attack ads" that aired in the Washington, D.C., and New York area earlier about vehicle dumping in the name of CASE.

"We are disappointed that allegations appear to have been instigated by a campaign of misinformation that is funded and directed by a non-U.S. national, related to events with no connection to the United States," Giuffra said.

CASE denial

But Scimeca said CASE "absolutely" rejects Volkswagen's characterization of its involvement in this issue.

"Furthermore, this is a company that was caught, and pleaded guilty to, engaging in systematic fraud on millions of consumers in the U.S. and around the world, as well as a wide conspiracy to hide their crimes," he said.

Scimeca said CASE's efforts are directed "at holding them accountable for their deceitful behavior and ensuring that U.S. consumers are not further defrauded by their actions or those of any other automaker."

He said CASE wants to know what the vehicles have been equipped with and what kind of testing is going on related to the cars and SUVs which VW is slowly returning to dealers for sale.

"We need answers and we don't have any," he said. "Before they sell the autos, they ought come clean."

But the lawyer representing VW said in the letter to the congressional committee that the company is subject to compliance oversight by an independent compliance monitor for three years under its court-ordered agreements.

Additionally, VW is responsible for ensuring modified vehicles in customers' hands continue to comply with emissions standards, the letter said. For five years, VW must conduct in-use testing on modified vehicles, invite EPB and California regulators to observe testing and submit the results.

For vehicles receiving fixes, Volkswagen must label them and provide a mechanism for potential purchasers to determine if the vehicles have received the approved repair, according to VW.

VW said it has concluded court-ordered consumer, federal and state settlement agreements totaling $23 billion, according to Giuffra's letter to the committee. Included in that amount is up to $11.2 billion to affected customers in buybacks, early lease terminations and other payments and benefits, the letter said.

Also, VW agreed to pay a $2.8 billion fine and plead guilty to conspiracy, obstruction of justice and introducing imported articles in the U.S. by means of false statement. After the plea deal with the U.S. Department of Justice and the EPA, VW agreed to a three-year probation term.

As of June 8, VW restricted, removed from commerce or modified more than 432,435 affected 2.0-liter vehicles and about 63,315 affected 3.0-liter vehicles, according to the letter.

VW developed emission modifications to fix all the 2.0-liter vehicles except for a small number of model year 2012-14 Passat manual transmission sedans. The company also developed a fix for all 3.0-liter "generation 2" vehicles, the letter said. The company said it has secured approval of a fix for "generation 1.2" SUVs including 2011-12 Touaregs and Q7s.

Contact staff writer Mike Pare at mpare@timesfreepress.com or 423-757-6318. Follow him on Twitter @MikePareTFP.


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