Volkswagen brand chief confident of finding solution to U.S. diesel issues

[January 06, 2016]  (Reuters) - The head of Volkswagen AG's top-selling brand said on Tuesday he is confident the German automaker will reach agreement with U.S regulators to bring nearly 500,000 diesel vehicles into compliance with U.S. emissions laws.

"We are confident we will find an acceptable solution," VW brand chief Herbert Diess said at a press conference at the Consumer Electronics Show in Las Vegas, Nevada.

In an interview with Reuters, Diess said fixing older VW cars equipped with 2.0-liter diesel engines will be more difficult than bringing more recent models into compliance.

"The intrusion into the car will be quite significant," Diess said of the older models. Some U.S. regulators and lawmakers have said VW may have to buy back older models. Diess didn't say whether VW is discussing that, but said he is optimistic an agreement with U.S. regulators will be reached soon.

"It's a very constructive dialogue," he said.

Diesel technology will still play an important role in VW's future product strategy, Diess said. "Diesel still has a future in some segments," including in sport utility vehicles, "and in some markets it will be a must," he said. Europe will still be a major diesel market in the next decade, Diess said.

Volkswagen has admitted it installed software in certain diesel models sold in the United States, that allowed the cars to pass government emissions tests, but then emit nearly 40 times the allowed levels of pollutants on the road.

The U.S. Justice Department on Monday sued Volkswagen for up to $48 billion for allegedly violating U.S. environmental laws.

Diess said Volkswagen expects the company will be able to repair by the end of 2016 about 8.5 million diesel cars sold in Europe that don't comply with emissions standards.

Separately, Diess announced a new partnership with Mobileye, the Israeli machine vision company that is a leader in camera technology used in advanced safety features such as automatic braking or lane departure warning.

VW and Mobileye signed on Tuesday an agreement under which Mobileye's camera systems will beef up the mapping systems VW cars will use to enable autonomous driving, Diess said.

"We always have to look at partnerships," Diess told Reuters. "This world is changing so much faster than our traditional world" of automotive suppliers.

Diess showed off VW's concept for an electric, highly connected microbus, called the Budd-e, which he said could be brought to market by 2020.

(Reporting by Joe White in Detroit; Editing by Sunil Nair and Muralikumar Anantharaman)

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