Despite a toughly worded statement from Californian regulators on
Tuesday, the meeting with the Environmental Protection Agency (EPA)
represents Volkswagen's (VW) best chance for some time to draw a
line under a crisis that erupted four months ago when it admitted to
cheating the U.S. tests.
CEO Matthias Mueller, on his first visit to the United States since
the scandal broke, said on Sunday he believed a new catalytic
converter system could be fitted to most affected U.S. vehicles that
would satisfy regulators.
However, the meeting with the EPA risks being overshadowed by an
interview in which Mueller appeared to play down the seriousness of
the cheating by Europe's biggest carmaker.
In comments aired by National Public Radio (NPR), Mueller blamed the
scandal on a misunderstanding and called it a technical, not an
ethnical, problem.
The remarks, coupled with the time it has taken Mueller to visit the
United States since being made CEO in September, have raised fresh
questions over VW's handling of the crisis.
A union source close to VW's supervisory board said he was
"astonished" by Mueller's remarks. "This is a key week for
Volkswagen as it struggles to regain ground in the United States.
Those comments are anything but helpful and should have never been
made," he said, speaking on condition of anonymity.
Barclays analysts said obtaining the goodwill of U.S. authorities
could be crucial in reducing civil or criminal penalties the German
carmaker is likely to face.
After VW asked to redo the interview, Mueller - who is not confident
in English - told NPR he had found the situation hard to handle as
he was in a loud environment hemmed in by reporters when he made his
comments at the Detroit auto show, and apologized to customers,
dealers and authorities.
Shares in VW, down about a fifth since it admitted cheating the
tests, rose by as much as 3.4 percent on Wednesday, outperforming
the German blue-chip index. By 1230 GMT, they had pared gains to
trade up 1.3 percent at 122.55 euros.
"Investors are betting that a solution will come out of Mueller's
meeting with the EPA," said a Frankfurt-based trader.
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U.S. environmental regulators are unimpressed with VW's efforts so
far to redeem the damage done through the emission of 40 times the
legal limit of nitrogen oxide by its 2.0 liter diesel cars over
seven years.
"VW's submissions are incomplete, substantially deficient, and fall
far short of meeting the legal requirements to return these vehicles
to the claimed certified configuration," the California Air
Resources Board (CARB) wrote in a letter to VW on Tuesday.
VW said the letter referred to its initial recall plans submitted to
California in December.
CARB said it would continue to work with the carmaker and the EPA to
find a solution, but emphasized the danger to public health that VW
continued to pose.
Ferdinand Dudenhoeffer, head of the Center of Automotive Research at
Germany's University of Duisburg-Essen, said VW and Mueller had
suffered an overall "strategic failure" in the United States.
He said: "I believe they considerably underestimated the readiness
in America to resolve the issue seriously and effectively. It looks
like they were playing for time. The Americans don't like that."
(Additional reporting by Jan Schwartz, Anika Ross and Andreas Cremer;
Editing by Mark Potter)
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