Volkswagen emissions scandal and vehicle type approval Contents

3European Whole Vehicle Type Approval

The type-approval system

38.European Whole Vehicle Type Approval is the process that ensures vehicles meet relevant environmental, safety and security standards. Manufacturers have to comply with the process before bringing a car to market. Tests are performed on a production specification vehicle that is representative of the ‘type’ that will go on sale. The test methodology is outlined in EU and UN regulations. There are four main stakeholders in the type-approval system:

i)Approval authorities (certifies vehicles are safe to be sold in Europe)

ii)Technical Services (designated by type-approval authorities for witnessing tests and collating the necessary information to submit to approval authorities)

iii)Manufacturers (produces vehicles, systems and components)

iv)Test facilities (authorised laboratories approved by approval authorities as being able to undertake testing)72

Each member state has an approval authority either as part of government or representing government. The manufacturer decides which approval authority to work with and that approval authority does not have to be based in the same country as the manufacturer. Once a car’s individual system and component approvals are in place they are reviewed as part of a whole vehicle inspection and then approved as an entity by an approval authority. The VCA is a technical service as well as the approval authority for the UK. The VCA can designate laboratories to act as a technical service when the VCA does not possess the technical competence to conduct certain tests. Tony Soper, Technical Specialist for Homologation,73 Millbrook, said that the VCA usually allocates electro-magnetic compatibility testing to a designated technical service but for most other tests the VCA acts as the technical service.74

The VCA type-approval process75

39.There is a great deal of overlap between the stakeholders in the type-approval process and it is inaccurate to consider them as separate bodies acting as a system of checks and balances against one another. Test facilities can be designated technical services; manufacturers can have their own laboratories accredited as test facilities; the VCA is both an approval authority and a technical service.76 Each body that conducts or scrutinises type-approval work receives income from manufacturers.

Conflicts of interest?

40.The VCA charges manufacturers for the work it does as a technical service and for certification work, leading to accusations that it is not sufficiently independent. Manufacturers were said to select which technical service and approval authority to use on the basis of which would provide the most favourable, or most lenient, service. Transport & Environment, an NGO, said:

Since type approval can be undertaken anywhere within the EU (and once approval is issued it must be accepted in all Member States) there is competition between Approval Authorities and Technical Services throughout the EU for the business of type-approving vehicles and auditing to ensure the conformity of production requirement (since manufacturers will be charged for providing the type-approval services). The need to win business from vehicle manufacturers calls into question the independence of testing and approving authorities in the way they perform tests, and represents an obvious incentive for authorities to generate test results that are advantageous to the clients.77

41.The VCA and technical services claimed manufacturers chose to work with UK testing and certification services for logistical reasons and not because they were more lenient or cheaper than their competitors. Paul Higgs, Interim Chief Executive, VCA, was reluctant to say that the VCA had a significant commercial motivation to attract type-approval business from manufacturers.78 He said, “We are not after their business. They come to the VCA because normally within Europe it usually comes down to a question of logistics. Manufacturers in the UK will tend to use the type approval authority and/or technical services in the UK.”79 Paul Higgs was more explicit about the competitive realities of attracting type-approval work in his foreword to the VCA’s latest Annual Report and Accounts:

Many of our services compete with European public sector and international private sector providers.

I am pleased to announce that our core Product Certification activities increased significantly this year in response to growing demands from the industry sector for our services, a strong performance indeed given the competitive nature of the automotive sector.80

42.The VCA has received over £80 million from type-approval services since 2005, according to Greenpeace. The proportion of VCA income derived from manufacturers through type-approval work rose from 52 per cent to 70 per cent over the last 10 years.81 The VCA is obviously reliant on manufacturers for a large proportion of its income. Transport & Environment found that three quarters of a ‘Dirty 30’ list of cars with suspicious emissions behaviour were approved in Europe by approval authorities based in the same country as the manufacturer. The VCA approved most of those cars with questionable emissions practices. The implication was that there is an economic incentive for national governments not to robustly challenge manufacturers based in their own countries. Greg Archer, Director of Clean Vehicles, Transport & Environment, said, “Countries are protecting their car industries from effective regulation at the cost of citizens’ health. Instead of playing the blame game, ministers should dig deeper in their investigations to unveil all types of defeat strategies.”82

43.As the VCA is both a technical service and an approval authority it could be argued that it effectively marks its own homework. Paul Higgs, interim Chief Executive, VCA rejected the idea that its dual role was a conflict of interest on the grounds that there was a clear demarcation between the technical service and the approval authority sides of the business and the granting of type-approval certification was sufficiently regulated. He said, “The team that actually checks and monitors the test reports that come in is separate from the test engineers. They ultimately issue the approvals based on the information presented—evidence presented that a vehicle has passed and met the regulatory requirements.”83 Alex Burns described the VCA as responsible for maintaining the “integrity of the system”84 but we believe the VCA’s failure to identify cheating by Škoda has damaged that integrity.

44.Test facilities and designated technical services rely on revenue from manufacturers for their services in a similar way to the VCA. Engineering and testing businesses such as Horiba Mira test vehicles for certification purposes but also have a role in vehicle development: “We are an engineering business. That is around 45% of our business. We design and engineer vehicles for companies around the world. We test vehicles and we run a technology park.”85 Manufacturers are based at their site: “We have 30 organisations already based at MIRA and that includes major vehicle manufacturers, plus tier ones—people like Bosch and TRW, and so on.”86 Millbrook also run a technology park and host manufacturers at their site.87 Technical services and test facilities said that it was not in their interests to be lenient during tests despite their close relationship with manufacturers. Paul Higgs said that the VCA did not operate a no pass, no fee system, “You get charged whether the test is passed or otherwise.”88 Tony Soper, said “It is in our interest as a testing organisation for the vehicle to fail, because then we would do more tests.”89 Both Horiba Mira and Millbrook said there was no advantage to any stakeholder in the type-approval process from substandard vehicles passing certification tests.90 We believe the recent spate of revelations on widespread test cheating demonstrated that has not stopped manufacturers from trying to do so. In Europe the absence of a deterrent to manufacturers has helped to enable that.

45.The concentration of multiple roles within highly competitive certification and testing businesses has led to further concerns over conflicts of interests. Dr George Gillespie, Chief Executive Officer, Horiba Mira, said, “In theory, you could say that the engineering business is in conflict with doing certification”.91 He said that potential conflict of interest was prevented by separate reporting lines on the technical service side and the engineering side: “We bring UKAS92 in to audit what we do; we ensure that we have a separate audit to make sure that we have that independence.”93 Those businesses not only work alongside manufacturers to develop vehicle technology, they also offer consultancy services to manufacturers on how to pass type-approval tests. That means they are working with manufacturers to develop vehicle technology, advising manufacturers on how to pass tests, and then in some cases, conducting those same tests.94 Dr George Gillespie said consultancy work was conducted by staff within the engineering department but when “a vehicle turns up to be tested, it is [tested by] an entirely different group of people.”95 Alex Burns said, “You would not get the same person advising on how to pass a test and then doing the test itself. You would always make sure that there was clear delineation between those responsibilities.”96 The Commission is less relaxed about the concentration of roles held by technical services. It has published a proposal that contains stricter rules regulating the independence of technical services, including the “separation of testing/consulting activities”.97

46.The Commission also intends to remove the power to designate technical services from member states. Designation would be based on the results of regular audits by experts from other member states and the Commission which will have the power to oppose the designation of a technical service. The Commission will have the power to suspend, restrict or withdraw the designation of technical services that are underperforming and too lax in applying the rules.98 The Commission wants to change how manufacturers pay for the services of technical services. Under the new regulation technical services will no longer receive direct payments from manufacturers. Instead manufacturers will pay approval authorities (on the basis of what is charged today by the technical services) and the funds will then be reallocated to technical services.99 The stated aim is to sever the financial link between manufacturers and technical services.

47.We are concerned by the overlap of so many roles in designated technical services and vehicle testing and certification businesses. It is now recognised that more independence and a great many more checks and balances are required to restore confidence and competence in the type-approval process. The automotive sector has failed to acknowledge this problem. The Department for Transport must act to create a clear separation of functions for designated technical services to eliminate any possibility of conflicts of interest. At the very least, designated technical services must not be allowed to offer consultancy services to manufacturers while also conducting and witnessing certification tests. Failure to make this change would perpetuate a conflict of interest.

In-service surveillance

48.Confidence in the type approval system will be achieved only when the remit of approval authorities, including the VCA, is reinterpreted so that they become industry regulators rather than industry partners. That would best be achieved by prioritising in-service surveillance in a similar way as the US EPA.

49.In-service surveillance is the process of spot-checking vehicles to ensure they still have a pollution performance that is within a certain margin of the type-approved values. The US vehicle certification system is based on conducting in-service surveillance on vehicles that are self-certified by manufacturers. We do not believe that the self-certification model should be replicated in Europe but lessons should be learnt from the EPA’s method of random sampling and its reaction to complaints by conducting investigative testing. Nick Molden described the US system as “far superior to the current European system.”100 He said reforms to strengthen the type-approval systems would be most successful if they focused on introducing strong independent in-service surveillance which “to all intents and purposes does not exist today”.101 Regulations only stipulate that manufacturers spot-check their own vehicles and then hand the results to the relevant approval authority under the Conformity of Production system.

50.Some European approval authorities have performed additional spot-checks in addition to those conducted by manufacturers, including in Netherlands, Sweden and Germany.102 The VCA itself conducted an in-service surveillance programme for emissions up until 2011. Millbrook, a testing service, had the contract to carry out that work.103 Between 2005 and 2011 the VCA tested around 10 different models per year.104 227 individual tests were completed (76 petrol and 151 diesel) and 87 vehicles failed to achieve a “pass” for all pollutants (14 petrol and 73 diesel) between 2005–06 and 2010–11.105 When any cars failed the VCA carried out more tests on the same models and took an average.106 As a result the DfT found just two model failures in a decade, a Mitsubishi Carisma Petrol, (2005–06 test) and a BMW Mini One D (2008–09 test). In the case of the BMW Mini the VCA told the KBA, “to enable them to take action”. The Government did not say what action was taken subsequently. In the case of the Mitsubishi the manufacturer was contacted directly and they found “a number of anomalies in the test vehicle that could account for the failed result”. After further talks with the manufacturer, “no further action was taken”.107 Some of the cars that were tested could have contained defeat devices but the VCA was not looking for such cheating. The VCA retested cars under the same emissions tests used for the purposes of type approval. The focus of the in-service surveillance programme from 2011 was to examine “aftermarket alteration” of vehicles. Expenditure on in-service surveillance then dropped substantially from £200,000 in 2010–2011 to £40,000 in 2012–13. In 2014–15 the VCA allocated a budget of £150,000 for aftermarket alteration in-service surveillance but only £42,300 was spent.108

51.The DfT said that it will now start a more robust in-service surveillance programme based on the Emissions Testing Programme (ETP) that it launched in response to the VW emissions scandal.109 A new unit, which includes staff from the VCA and DVSA, is being established to conduct that work. The DfT is providing a budget of £1,000,000 this year. The Commission is also introducing new requirements for in-service surveillance under the auspices of the fourth Real Driving Emissions test package. It will consist of two elements:

a) In-service-conformity (ISC) testing to be done by the manufacturer and the authority responsible for issuing the type approval, which is first of all intended to assess the durability of emission control systems over a certain period of use. This work can largely follow the principles for the current ISC testing, even though the participation of the type-approval authority must be strengthened and the specific statistical conditions of the PEMS testing must be taken into account.

b) Market surveillance testing that may be done by either the Member State or a “third party”, i.e. an authority not involved in the initial type approval process or independent parties like NGOs or the manufacturers’ peers. The possibility of such independent surveillance testing is particularly important, if not decisive, for the effectiveness of the RDE test procedures, since the latter contain random elements and are based on the legal requirement that conformity factors are not exceeded for a whole variety of different PEMS trips.110

The Commission said a robust in-service surveillance programme should in future comprise a “comprehensive yearly testing programme” that contained both of those elements.111 The Commission is planning to adopt powers to carry out ex-post verification testing through its Joint Research Centre (JRC) and initiate recalls when necessary.112

52.We believe the ETP report would make a good model for a future annual release on the results of the ongoing in-service surveillance programme provided that the DfT publishes additional data that is required for independent scrutiny. A recurring complaint from independent researchers was that the type-approval system was not transparent. That was one reason why manufacturers had been able to pass emissions tests in ways that were not foreseen until now. Professor James Tate, Institute for Transport, Leeds University, said that in 15 years of studying emissions testing he had not seen any data from the manufacturers or the VCA.113

53.The Vehicle Certification Agency is both an industry partner and industry tester. That is inappropriate and has harmed the integrity of the type-approval system. The motor industry requires a robust regulator and the VCA must make scrutinising manufacturers and their engineering practices its first priority given the recent revelations that manufacturers misled regulators or exploited loopholes in regulations on a substantial scale.

54.We welcome the Government’s most recent commitment to conducting in-service surveillance. The in-service surveillance work that the VCA conducted before 2011 was inadequate and underfunded, and even when it revealed questionable practices by manufacturers its results were not followed up. The Government’s most recent in-service surveillance work was considerably better and we recommend that the VCA publish an annual report of its in-service surveillance results in the style of the Emissions Testing Programme report. That future work should be improved by combining it with a commitment to make its results and underpinning data publicly available for further scrutiny. We believe this can be done within the budget that has been set. We acknowledge concerns about commercial confidentiality and believe that can be managed. The Department for Transport must consult on what would constitute a robust in-service surveillance system and what data it should release and how it should do so. The VCA must make it easier for stakeholders to bring questionable practices to its attention so that it can investigate further.

72 Horiba Mira (VTA0028) page 2

73 Homologation is the process of certifying or approving a product to indicate that it meets regulatory standards and specifications

74 Vehicle type approval, Q104

76 Vehicle type approval, Q113

77 Transport & Environment, Mind the Gap!, page 21

78 Vehicle type approval, Q509–514

79 Vehicle type approval, Q515

83 Vehicle type approval, Q507

84 Vehicle type approval, Q161

85 Vehicle type approval, Q117

86 Vehicle type approval, Q111

87 Vehicle type approval, Q111

88 Vehicle type approval, Q507

89 Vehicle type approval, Q153

90 Vehicle type approval, Qq126–129

91 Vehicle type approval, Q117

92 UKAS is recognised by Government to assess against internationally agreed standards, organisations that provide certification, testing, inspection and calibration services.

93 Vehicle type approval, Q117

94 Vehicle type approval, Q158

95 Vehicle type approval, Q159

96 Vehicle type approval, Q120

98Car industry: European Commission tightens rules for safer and cleaner cars” European Commission press release, 27 January 2016

100 Vehicle type approval, Q27

101 Vehicle type approval, Q33

103 Vehicle type approval, Q201

109 The results of the DfT’s Vehicle Emissions Testing Programme are examined in the next chapter

113 Vehicle type approval, Q2

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12 July 2016