Conclusions and recommendations
The Volkswagen Group emissions scandal
1.It is not credible for Volkswagen Group to apologise for its conduct only to then deny that it had done anything wrong. Volkswagen deceived both regulators and their own customers on a global scale and it has shown a cynical disregard for emissions limits which exist to protect human health from dangerous pollutants. VW’s conduct has severely undermined confidence in vehicle standards that are relied upon by consumers and it has not only brought its own integrity into disrepute but also that of the auto sector. (Paragraph 23)
2.It is not credible for VW to say that it does not know the exact contribution that the defeat device made to meeting EU emissions limits. We are concerned by the Department for Transport’s ambivalence towards assessing the legality of Volkswagen’s use of defeat device software despite its condemnation of Volkswagen’s actions to us and in the media. The Department for Transport was too slow to assess the use of its powers under the Road Vehicles (Approval) Regulations 2009 to prosecute Volkswagen for its deception. It took five months before the DfT took even preliminary legal advice on a prosecution. It is deeply concerning that the Department is relying on the European Commission to act even though the Commission does not hold the necessary evidence or have powers to prosecute. We are also concerned that regulators have shown little interest in establishing whether Volkswagen Group has broken any laws. The Vehicle Certification Agency has evidence that defeat devices were installed in vehicles that it type approved but it has not attempted to conduct any tests to prove that type approval was contingent on the use of the defeat device software. The VCA must measure the exact contribution that the software made to meeting Euro 5 emissions standards. That would facilitate investigations and court actions in the UK and across Europe. (Paragraph 30)
3.Volkswagen’s treatment of customers in Europe compared to its treatment of customers in the US is deeply unfair. Volkswagen said it was justified in providing goodwill payments to US customers, but not European customers, on the grounds that US customers would face delays to fixing their vehicles. The delay to fixing vehicles in Europe is now creating a great deal of uncertainty over whether cars will be fixed, their residual values and their compliance with regulations. We do not accept Volkswagen’s justification of its policy on payments and see nothing to justify their refusal to offer comparable payments to customers in Europe. Volkswagen must provide goodwill payments to European vehicle owners equal to offers that have been made to US vehicle owners. The Sale of Goods Act 1979 might also offer owners some recourse for compensation. (Paragraph 36)
4.We welcome the work that approval authorities have done to ensure that there is no adverse impact on fuel economy and other aspects of vehicle performance. For consumers to have confidence in any technical solution, approval authorities must be mindful that component reliability and durability are not impaired either, as that could lead to high repair costs for owners. The VCA must ensure that owners are not out of pocket in any way as a result of Volkswagen’s technical solution; Volkswagen must meet those costs. (Paragraph 37)
European Whole Vehicle Type Approval
5.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. (Paragraph 47)
6.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. (Paragraph 53)
7.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. (Paragraph 54)
Emissions tests
8.The agreed conformity factors are a step in the right direction. Remaining RDE test measures are still to be agreed but once RDE testing is implemented it should result in lower real-world NOx emissions. We were disappointed that the Department for Transport did not strive for stricter conformity factors given scientific evidence that shows NOx could have been cut much faster. We call on the Department to influence negotiations in favour of a conformity factor of 1.2 or 1.3 at the next available opportunity and to bring the conformity factor down to 1 as soon as possible. (Paragraph 66)
9.We welcome the Department’s efforts to implement the Worldwide Light-vehicle Test Procedure. We recognise that global test and certification standards bring savings to vehicle design and development which should in theory reduce prices for consumers. We recommend that the Department assess the viability of introducing a real-world element to CO2 testing. (Paragraph 69)
10.The transition to WLTP will have a number of consequences which must be addressed carefully if they are not to lead to confusion amongst consumers. In particular the Department for Transport and HM Treasury need to assess the impact that the introduction of the WLTP will have on cars’ CO2 emissions and the related VED bands. That information must be provided to motorists as soon as possible and we call upon the Government to publish that information. Motorists must not be financially penalised as a result of an improved testing and certification regime. The Department for Transport should consider publishing information on gov.uk to explain how vehicles tested under WLTP compare with those tested under the NEDC by including a ‘conversion factor’ allowing motorists to compare emissions standards and performance. (Paragraph 73)
11.The Department for Transport should examine ways of standardising and optimising the format of vehicle labelling to ensure consumers are provided with information that is intuitive and user-friendly allowing for simple and accurate comparisons between cars. The DfT must take examples of best practice from other jurisdictions. During the period of transition to the WLTP and RDE car labelling will require additional information so that consumers can compare standards on a like for like basis between newer and older vehicles. (Paragraph 74)
12.We disagree with the European Commission and the Department for Transport on the contention that the regulations for prohibiting defeat devices is adequate. It has led to an unacceptable dispute over the legality of VW’s actions in Europe as well as the emissions control strategies of a wide-range of other manufacturers; we believe some of those strategies are defeat devices by another name. We welcome the DfT’s support for plans to introduce requirements for manufacturers to disclose their emissions control strategies which will go some way to reduce the flaws in the prohibition but we have not seen evidence that the European Commission’s plans go far enough. We recommend that the DfT work with the Commission to ensure that the prohibition on defeat devices is strengthened with guidance for approval authorities on how to evaluate claims that emissions control strategies constitute a viable exemption to the prohibitions on defeat devices, introduce a consistent, method to approve or reject claims for exemptions and to introduce a requirement on manufacturers to prove to approval authorities that alternative emission control strategies are necessary and that no viable alternative exists. (Paragraph 79)
13.We welcome the Department for Transport’s Vehicle Emissions Testing Programme report. We were disappointed that the DfT did not publish the underpinning data in May 2016. The DfT must make all the underpinning data it holds available for independent scrutiny at the earliest opportunity. The DfT must ensure that the larger data sets are easy to request and the mechanism for doing so is well signposted on gov.uk. The DfT must publish records of its discussions with manufacturers on their temperature-dependent EGR strategies including the reasons provided by each manufacturer for high emissions in ambient temperatures with reference to the manufacturers’ descriptions of the influence of temperature on the emission control strategy and the temperature below which the EGR is switched off or reduced for each vehicle. (Paragraph 81)
Conclusion
14.The Volkswagen emissions scandal has brought the integrity of the auto sector into disrepute. VW’s conduct since the scandal has only served to further damage its reputation. It has communicated poorly with customers which has led to confusion over when and how affected vehicles will be fixed. Furthermore, VW has not been open about the nature of the defeat device software that it installed in millions of vehicles worldwide. Instead of answering many of our questions directly, VW asked us to await the results of an internal investigation by Jones Day. We do not believe that the internal investigation will provide the answers that are needed urgently. VW has used the investigative process to make announcements that only served to exonerate senior management. Approval authorities and regulators cannot depend on VW to co-operate and in this report we have called upon the Department for Transport to use its powers and resources to properly investigate VW which we believe it has failed to do, so far. (Paragraph 82)
15.The type-approval framework requires a great deal of improvement before it can be considered fit for purpose. We welcomed the introduction of Real Driving Emissions Testing and the implementation of the Worldwide Light-vehicle Test procedure. Standards agreed globally are worth pursuing. It is important that the negotiations are transparent and open and that the genuine concerns of motor manufacturers are balanced against the importance of safety and environmental policy goals of a global testing system. We are concerned the EU’s method of policy making has not had that level of transparency and the motor industry has had too much influence over how emissions limits are set and the timescales for implementation. (Paragraph 83)
16.The fine detail of the new emissions tests is still to be agreed and the Department for Transport must do everything in its power to ensure that they are implemented with sufficient stringency. Little was done to address the emissions gap before the Volkswagen Group emissions scandal drew public attention to the deficiencies in current tests. The emissions gap was the result of a failure to keep pace with vehicle technology. The only way to overcome that problem in future is through rigorous scrutiny by approval authorities operating in a system of consistent standards that has opportunities to share information and report the impact of new vehicle technologies on the effectiveness of existing regulation. A failure to do that will only result in the stringency of the new reforms becoming obsolete in years to come. (Paragraph 84)
17.The Volkswagen emissions scandal would not have been revealed by any of the approval authorities or technical services under the current framework. It is apparent that the potential for manufacturers to use defeat device software or other dubious emission control strategies were known for many years. Since the VW scandal broke other questionable practices by a range of manufacturers have come to light. Testing can only ever be a sampling approach and it is vital that there is a system of effective in-service surveillance that will detect where tested vehicles are not performing as they should in real-world conditions. As vehicle technology becomes increasingly complex in-service surveillance must become a far greater priority for approval authorities. Had approval authorities made greater efforts to be seen to be looking for cheats, the current regulatory crisis could have been avoided or at least significantly reduced. (Paragraph 85)
© Parliamentary copyright 2015
12 July 2016