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The biggest auto scandal in history is not going away yet…

WEEK by week, day by day, the emissions saga rumbles on, with petrol engines now also implicated in attempts to cheat the regulators. Oliver Harry takes a look at what we know… so far. 

Q) So, one month has passed. Is the scandal still rumbling on?
A) You betcha, and it shows no signs of disappearing any time soon. There’s barely a day goes by without the German giant making headline news around the world.

Q) Was VW actually using the defeat devices in European emissions testing, then?
A) It was indeed. VW’s UK MD, Paul Willis, admitted as much to MPs during a select committee grilling on October 12. Willis handled the situation well, it must be said, and shed light on some pretty grey areas. He confirmed that 1.2 million cars had been affected on these shores, and he also acknowledged that VW had ‘mishandled’ the whole situation.

Q) 1.2 million? How on earth is VW going to fix them all?
A) Good question. Around 400,000 will need fuel injectors altering, as well as a software fix. The remaining number, made up of around 700,000 2.0-litre and 30,000 1.2-litre models, can be fixed with software alterations. It isn’t as drastic a change as feared, but the task ahead for VW UK is far from straightforward.

Q) It sounds promising, nonetheless. Surely a hardware change is needed, though?
A) Not according to Willis, who maintained that UK vehicles won’t need the hardware changes that will likely be applied to cars over in the US. Stateside vehicles will probably get a new urea tank, as part of an exhaust system overhaul. This is down to different regulations in the UK and US markets, apparently.

Q) Still, all these changes are bound to cost a bob or two…
A) You could say that. In fact, Volkswagen has admitted that it will cut spending by nearly £742 million to try to pay for it all. It sounds like a lot already but it’s bound to cost more. Much more. It’s going to have a big impact on future car development, that’s for sure.

Q) But the group must still have enough money in hand to cover the vast expenses?
A) Just about, we have been told, although the European Investment Bank, which has loaned Volkswagen some £3.4 billion since 1990, is threatening to withdraw its support. It has a point, perhaps, as the loaned money was (irony alert) intended for low-emission engine development, after all…

Q) So VW is beginning to react to the crisis constructively then?
A) Yes, although its slow reaction to the scandal didn’t go unnoticed by the parliamentary select committee. MPs questioned why it took so long for VW to take affected cars off sale, leaving customers to unknowingly buy them up.

Willis insisted it as logistically unavoidable. VW is a big machine with countless cogs, of course, and the long chain of command makes swift decisions difficult. But you can’t help but question why it hasn’t handled the situation as well as other giants have dealt with crises in the not-too-distant past. Toyota springs to mind…

Q) What will it do now, because surely no-one is going to buy a diesel VW any more?
A) Yes, it is pretty hard to see, isn’t it? VW much agree, because it has announced a cut back of diesels. It seems electricity is in and diesel is out at VW, with a huge refocusing towards EV powertrains.

We all thought the Phaeton would be the first to die in the name of a new era of frugality. Not a bit of it. In fact, it will be back as an electric, Tesla-rivalling flagship soon enough. VW is probably hoping it will distract people away from the here-and-now. That is, however, rather difficult to envisage.

Q) Interesting. So will VW begin repairing European cars from January onwards?
A) Er, not quite. Although VW has promised to begin fixing its cars from January, the German authorities rejected the plan. Instead, they issued a mandatory recall of 2.4 million cars.

It seems the German government is just as fed-up with VW’s slow response as the rest of us. Nevertheless, it’s pretty rare for it to be publicly snubbing VW, and demonstrates the government’s desire for some level of control over the deteriorating situation.

Q) Talking of governments, is this really the first that our government has heard of the emissions scandal?
A) This is where get even more interesting. It Appears that the government was warned about dodgy diesel emissions as far back as 2009 – at least according to an article in The Times.

Some clever bods from King’s College London and Leeds University found the NOx levels and particulate matter in London had risen by seven per cent in five years when they expected it to have fallen by 20 per cent. Something was clearly afoot.

Q) So the scientists tipped the government off?
A) That is what we are being led to believe. Their analysis was commissioned by the Department for the Environment, Food and Rural Affairs, after all. A similar warning was delivered in 2011, too. We don’t know precisely how much the government actually knew about the issue, but it must surely have had at least an inkling following the investigations.

Q) Well, at least we know exactly which cars have been affected now, right?
A) You’d think so, wouldn’t you? What with revelation after revelation erupting in the past few weeks, you might imagine that everything is now fully out in the open. It seems, though, that we were wrong. Instead of slowing down, it turns out that VW’s EA 189 engine might not be the only one tainted…

Q) But didn’t VW insist that EA 189 was the only engine with the defeat device?
A) It did indeed. But US regulators are now claiming that the group’s 3.0-litre diesel unit fitted between 2014 and 2016 has a defeat device. It potentially affects 10,000 VWs, Audis and Porsches. Yes, you read that right – Porsches.

The Stuttgart marque has been dragged right into the heart of the scandal. It also drops group chief executive Matthias Muller into fresh controversy – he was in charge of Porsche when the engines were fitted, after all. If anything is even remotely amiss, he will find himself right in the firing line.

Q) Is Porsche’s involvement for certain?
A) Not as of yet, with VW vehemently denying the accusation and Porsche claiming that it has been ‘surprised’ by the allegations. The investigation is ongoing, and as Car Dealer goes to press, we are not entirely certain what this will mean for the sports car firm.

What we do know is that as more and more cars are brought into the spotlight, VW’s reputation is sinking further and further. How can we trust a manufacturer that could still be lying to us after we believed it had revealed all? It really (and literally) can’t afford for any more vehicles to fall under further suspicion now.

Q) That’s shocking. Surely VW can’t be hiding anything else from us?
A) You’d have thought not, but it has been. Just when we thought that the Porsche implications were damning, it emerged that the scandal has spread – massively – and that now petrol engines are involved. VW admitted there were CO2 irregularities in its smaller- engined vehicles, with reports pointing towards the 1.4-litre four-cylinder petrol in particular.

The BlueMotion diesel is also implicated. This revelation is a game-changer, dragging millions of new car owners into the crisis and costing VW an estimated €2 billion (£1.4 million) on top of the €6.7 billion it has already set aside for scandal fire-fighting.

Q) CO2 irregularities? How does this affect VW vehicles?
A) VW released a statement admitting to finding irregular CO2 levels in 800,000 of its vehicles – and in conflict with the manufacturer’s certified figures. What is so bizarre is that the scandal has been based entirely around diesel NOx emissions so far. This massively widens the crisis, and affects cars from the VW, Audi, Skoda and Seat brands.

Specifically, this implicates small models, with hatchbacks such as the hugely popular VW Polo and Golf, Audi A1 and Skoda Fabia being likely suspects. As this issue concerns CO2 figures, which is linked to fuel consumption, the road tax on UK roads for affected vehicles will probably rise. This is where VW really has an issue. As of yet, affected motorists have not lost any money, but with potentially higher road tax, the likelihood is Volkswagen will have some seriously angry customers on its hands.

Q) So is VW still the only company caught cheating? Surely it can’t be alone…
A) The finger of suspicion has now been pointed at Vauxhall after a German environmental organisation claimed that the Zafira 1.6 CDTi emits 17 times the legal level of NOx under EU6 emission regulations. Vauxhall firmly denies the allegations though, and there has been no confirmation of any wrongdoing.

Q) Has VW’s reputation been heightened or worsened because of all this?
A) Without doubt, VW’s reputation has been indelibly tainted, not only by the cover-up but also by the way that it has handled the situation. Poorly, in a word. The company has been slow to react. By keeping company execs away from the limelight – apart from when they are forced to face the music (cue Paul Willis) – the firm has failed to convincingly reassure customers.

It’s a dangerous game to play, because with the world’s media focusing intensely on the crisis, rumours can quickly escalate. What’s more, with further vehicles now suspected of emissions cheating, and the CO2 revelation further damaging public goodwill towards the company, it raises the question – could Volkswagen be hiding anything else?


IT’S estimated that 1.1 million cars in the UK are affected by the rogue software that led to the emissions scandal. So far, the spotlight has been on the VW brand itself and the impact on consumers. But how is the issue affecting dealers?

Alison Loveday, managing partner at independent law firm berg, said: ‘We have experienced first-hand what happens when businesses which rely on large institutions are let down by them. It can be terrifying to consider challenging them, as we saw with small businesses and the banks, as the various banking scandals started to emerge.

‘Yet for dealerships and fleet managers, the impact of the VW scandal could be huge. There
will be a need to consider the impact on sales as the extent of the damage caused to the VW brand in the eyes of its customer base and supply chain becomes apparent.’

Customers are cancelling orders and this will not only affect the financial performance of individual dealerships, but also the target and bonus arrangements of employees.

The financial and contractual arrangements in place may need to be renegotiated and bank covenants reviewed. The financial agreements entered into by consumers may be affected by, for example, a drop in residual values and the calculation of balloon payments, which, in turn, may impact the dealers. What of those business owners who are awaiting a deferred payment arising from the sale of a VW dealership? This payment may become unobtainable through no fault of the previous or current owner. More stories like this at – compare and save.

Loveday added: ‘We recognise the need dealers will have to engage with effective advisers, who can take these issues up on their behalf, and have those difficult conversations if necessary, but ultimately seek to negotiate a meaningful way forward. It is essential that dealers are invited to express their views and concerns, and to communicate any information they have which, with hindsight, now appears to be relevant, and which may assist VW in pulling together its strategy to rebuild trust in the motor industry.’

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VW emissions scandal worries automotive property investors

Oct 05, 15 VW emissions scandal worries automotive property investors

The Volkswagen scandal over diesel emissions tests has been well-documented over recent days, and the financial implications for the company look severe.

To date, VW has set aside $6.5bn, but there is speculation that it could cost up to $18bn to resolve the issue.

The scandal is a particular cause of unease for automotive property investors.

VW Group is by a long way the most traded and sought after manufacturer covenant, with a large number of institutional funds, property companies and private investors exposed to the world’s largest automotive manufacturing group.

The company entered into attractive institutionally-friendly leases which achieved the keenest yields in the market, by leveraging its significant covenant as a way to unlock high value sites, yet retain control by granting under-leases to dealer partners.

But a survey of 62 institutional investors, by the investment banking advisory firm Evercore, shows 66% would not invest in VW for six months, or until it clarified what costs, fines, and legal proceedings it faced.

We have witnessed similar early sentiment from UK property investors, but in reality such investors are unlikely to shy away for long. It is perhaps reasonable to assume that investors would not willingly look to dispose of VW-let investments at present, and therefore in our view the likelihood is that we will see a cooling off of activity, rather than values, as the investment market settles.

There is also the impact to consider on dealer covenants, especially those trading with VW group franchises. The manufacturer will certainly witness a fall in sales volume – in the short term at least – which will impact on profitability for dealer partners.  Whether this can be recovered through possible legal action, or by side agreement is yet to be seen, and how long it will last will be down to how quickly VW Group can regain customer trust.

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Hyundai celebrates a million vehicle sales in the UK

HYUNDAI has announced a significant milestone in its UK history – it has sold exactly one million vehicles since 1982 when it imported its first car, the Pony.

The landmark one millionth car is the all-new Tucson compact SUV which is Hyundai’s latest and fastest-selling model in the UK.  To celebrate reaching this milestone, the company will give this top-of-the-range vehicle away through its #M1LLION campaign.

The competition will ask users to nominate their ‘one in a million’ – a person they believe deserves to win the brand new car.

Tony Whitehorn, president and CEO of Hyundai UK, said: ‘To have reached a million cars sold in the UK is an amazing achievement for our business and this #M1LLION competition is a way to share this milestone with our loyal customers and social media fans.

‘We have been selling cars in the UK for a lot longer than many people think. The last 10 years, though, have been the most seminal in our history with more than 600,000 of the one million vehicles sold since 2005 and our market share has more than doubled to 3.5 percent.  This has made us the fastest-growing car brand in the UK.

‘They say the best advertisement for a car company is to see cars on the road and with that many out there, the future looks good for Hyundai.’

The landmark comes as Hyundai UK marks another milestone: 10 years as a global subsidiary. This was celebrated with A Streetcar Named Hyundai – a world-first zero-emissions driving challenge in London.

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NT Shaw of Louth joins the MG dealer network

NT SHAW of Louth, Lincolnshire, has joined the MG Motor UK dealer network, becoming the 63rd firm to do so.

Dealer principal Nigel Shaw said: ‘Everyone at the dealership is really excited about MG and we’re keen to get moving with it. We have some great customers who we know are just as excited as us about our new arrivals. We can’t wait to help grow the franchise within the MG team.’

Shaw is also an on-call watch manager for Louth Fire Station, joking: ‘The people of Louth will now have to get used to see me driving not only a fire engine, or a response vehicle, but an MG too!’

Matthew Cheyne, head of sales and marketing for MG, added: ‘We’re thrilled to welcome NT Shaw of Louth onboard. We look forward to working with them, particularly when they come with such passion and enthusiasm to get going. It’s also not a bad thing to have a life-saver amongst our network!’

NT Shaw of Louth will be holding an open weekend to celebrate adding MG to its portfolio, boasting a series of offers such as the £2,000 minimum part-exchange and zero per cent finance deals.

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Vantage Motor Group unveils £400,000 Skoda Morecambe refurbishment

VANTAGE Motor Group has unveiled its newly refurbished Skoda dealership in Morecambe following a £400,000 facelift.

The investment at the Lancashire-based dealership is intended to reflect Skoda’s new, upmarket corporate identity which is being rolled out across its UK dealer network.

The site on White Lund Industrial Estate has been transformed in line with the new look branding, with more emphasis on light and space.

Centre principal David Hainsworth said: ‘We have been observing a steadily increasing customer appeal for the Skoda brand and the refurbishment of the Morecambe dealership shows how both Vantage and Skoda are setting the highest standards for their customers.

‘The site looks incredible with more of the latest models, including the new Superb, on display than ever.’

The Skoda Morecambe dealership joined the Vantage family following the acquisition from David Ian Skoda in March 2015, and has since focused on growing the dealership and providing the best customer experience possible.

The site has been redeveloped with customer service at the heart of the design with new features including a dedicated customer hand-over area.

Skoda is looking to target another year of record sales in the UK after the Czech brand was named the number one automotive brand for customer service in the UK Customer Service Index (UKCSI) earlier in the year.

The new-look Morecambe dealership was unveiled at an evening launch event on Thursday, 26 November.

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AS THE winter weather arrives and with Christmas just round the corner, has offered some advice for generating end of year sales.

The guide was produced by Peter Watts – pictured above – who is director of dealer insight at, and used insight on consumer buying patterns and market conditions to outline the key areas on which to focus as the year comes to a close.

1. Bringing stock in; moving stock on: Watts says: ‘With demand increases kicking in from Boxing Day onwards, now could be a really smart time to acquire your ideal stock profile to pre-empt those sales.

It clearly pays to have good value, good quality vehicles at the low end of the insurance and running cost spectrum promoted clearly on your forecourt and online platforms in order to keep customers coming through the door.’

2. Understanding the finance life cycle: ‘While there has been much said about pre-registration potentially impacting upon the positive new car figures in recent years, it is important to look at the wider market trends also.

‘The significant jump in PCP deals on new deals in 2012 meant that this year, as the three-cycle came to its end, there were plenty of manufacturers offering strong incentives to retain customers and support the them into a new car. So, instead of struggling to find customers and pre-registering new vehicles, there was a real market.

‘The volume of part-exchanges means there has also been a growth in ageing stock available, (which) isn’t always so good for the retailer. Beware the dealer who sells too quickly in December and is faced with buying the same stock back in January at £500 more.’

3. Aligning the experience to buyer behaviour: ‘There is a key challenge for dealers around aligning their online and offline experience.

‘Consumers want to be able to turn up at a dealership in much the same way they would a restaurant after making a booking online. This means that the showroom should be expecting them, the delivery date of their next car already finalised.

‘Often, consumers will have conducted extensive research before they set foot in a dealership and, as a result, the role of the dealer is to validate the decision they have already made. Being quick, attentive and responsive can help a dealer to mitigate any other hurdles that might be in the way of a purchase, such as price differential or a missing accessory or feature.’

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New head of operations looks forward to an exciting future

A NEW head of operations has been appointed at GardX Assure Ltd.

Dave Allmark has moved from QBE to take up the position after 29 years within the motor trade and insurance industry.

At QBE, Hallmark headed up the company’s UK claims operation.

His CV includes various senior management positions in franchised dealers and groups; 10 years of claims and operations management with Warranty Holdings; and consultancy positions with NIG and The Warranty Group.

He was approached by QBE in 2009 to take the lead in redeveloping their UK product protection and international claims operations.

Allmark said: ‘GardX Assure has firmly established its position in this sector.

‘My appointment within this agile, ambitious and forward-thinking organisation is both exciting and well timed. I am very much looking forward to playing a key role in the ongoing development of the insured operation and in helping to take the GardX brand to the next level.’

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VW SCANDAL: Technical fixes announced for troublesome EA 189 engine

VOLKSWAGEN has taken a first step towards fixing its infamous EA 189 engine, having presented technical measures to the Federal Motor Transport Authority.

The measures, which are intended to correct the emissions issues plaguing the 1.6 and 2.0-litre engines, were approved by the federal authority. This, VW claims, will offer clarity for those still waiting to discover how it intends to solve the problem.

Specifically, a ‘flow transformer’ will be fitted in front of the air mass sensor on the 1.6-litre 189 engine. According to VW, this will improve the measuring accuracy of the sensor. A software update will also be carried out. VW expects these fixes to take less than an hour to complete.

The 2.0-litre engines will also receive a software update, but this will only take around half an hour.

VW stresses that its aim with these measures is to meet the emissions targets without impinging on power, fuel consumption and performance. However, as of yet, it is unclear whether this has been achieved.

The alterations are expected to be applied to recalled vehicles from January 2016, however it will take until the end of next year until changes are made to all applicable vehicles.

In its statement, VW was at pains to stress the importance of customer convenience. It pledged to contact all customers and to consider the needs of every individual, offering to provide courtesy cars free of charge.

These technical measures are already available for the majority of those affected in Europe with EA 189 engines. At the end of the month, similar measures will be presented to the Federal Motor Transport Authority regarding the 1.2-litre 3-cylinder diesel engine as well.

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Latest edition of Autodata’s iconic wall charts released

A FAMILIAR feature in the UK’s garages and workshops for over 40 years, Autodata has launched the latest edition of its iconic wall charts.
The new collection covers a wide range of up-to-date technical information – from diesel engine speeds to brake testing weights – across 39 of the world’s leading vehicle manufacturers.
The charts provide technicians with a quick reference point during MOT testing and, as with all Autodata products, the content has been researched directly from manufacturer data by Autodata’s team of 65 skilled industry-trained professionals.
Rod Williams, Autodata’s chief executive, said: ‘Autodata has evolved over the years from a publisher of paper-based manuals to the creator of a sophisticated online platform, in order keep up with the demands of modern workshops.

‘The wall charts may echo our more traditional publishing roots, but they also remain an iconic and important part of workshops up and down the country. We’re delighted to continue this much-loved part of garage life.’
Other charts in the 2016 range include exhaust and catalyst emission data, tyre pressures, front wheel tracking and MOT warning lights. Workshops can purchase five MOT wall charts as a bundle, saving over 68 per cent compared to the cost of buying them individually.

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