VW’s fines and penalties hailed as strong deterrent

Director of the Environmental Protection Agency (EPA) has hailed fines and penalties inflicted upon the VW Group as a great success for deterring further cheating from other automakers.

According to Reuters, Christopher Grundler, director of EPA’s Office of Transportation and Air Quality, in a meeting with automotive engineers commented on the effectiveness of the fines and penalties. He said, “It gets everybody’s attention”.

The progress of naming, shaming, and penalising VW mustn’t go unnoticed. The German automaker has pleaded guilty and paid $4.3 (£3.5) billion in civil and criminal fines in the U.S. This has led to a total pay-out of $22 (£18) billion thus far. The pay-out includes redress for vehicle owners, environmental regulators, U.S. states as well as dealers.

Will the effectiveness be reversed under Trump’s administration?

The positive impact of the fines and penalties may be reversed under Donald Trump’s presidency. The worry arose from reports that President Trump is reversing a number of environmental regulations, including the 2022-2025 vehicle greenhouse gas emissions limits.

According to the Washington Post, President Trump will instruct the EPA to make changes to greenhouse gas emissions limitations on electric utilities in executive orders. However, EPA nominee, Scott Pruitt, said that President Trump’s decision will be reviewed.

Aggressive enforcement is key

Mr Grundler believes “aggressive enforcement” is the key to the success of forcing automakers to comply with the emissions regulations. He states:

“Without a broad expectation of accountability, we know the inevitable result will be a race to the bottom – to whatever level is the lack of EPA oversight will allow.”

He continues to highlight the importance of compliance stating:

“We aim with our enforcement to make sure the cost of non-compliance is always higher than the cost of complying with our laws.”

Positive impact resulting out of the scandal?

There’s probably one positive impact that the whole cheating scandal has had on the whole. Through EPA’s real-world compliance testing after the scandal erupted in September 2015, EPA discovered that Fiat Chrysler Automobiles NV were also reportedly using illegal software which allowed excess emissions to be concealed. Thus far, Fiat Chrysler has denied any wrongdoing.

If VW’s history is anything to go by, Fiat Chrysler should either pray, or get their loose change together in the event of legal proceedings.

This could be déjà vu; first, the denial; then the acceptance; and finally, the repentance.

The latter will come at a hefty sum, no doubt.

Transparency and deterrence

Mr Grundler has also made plans to boost transparency in the system. He says that more non-business confidential information on vehicle testing, which will include emissions recalls and defect reports, will be published to the public.

The aim of the EPA is just for vehicles to perform/emit the same emissions in the laboratory as they do when driven in the real world. Mr Grundler reiterates this by saying:

“We want to discourage manufacturers from simply designing to the tests.”

I wonder how many automakers are shaking in their boots now. Some may have already created such “defeat devices” and are doing their best to conceal them so they go undetected. However, for those who are thinking about creating the cheating software, I believe that the punishment inflicted upon the VW Group is a strong enough deterrent for other automakers, as argued by Mr Grundler.