Volkswagen Canada resumes selling diesel cars at centre of emissions-testing scandal

David Bruser and Jesse McLean
The Toronto Star

Volkswagen Canada has recently resumed selling some of its scandal-plagued diesel cars at dealerships across the country, despite still being under investigation for allegedly using software on those same models to cheat emissions tests.

Federal government officials are “looking into the matter to determine the most appropriate course of action,” said Marie-Pascale Des Rosiers, a spokesperson for Environment and Climate Change Minister Catherine McKenna.

In the United States, Volkswagen got the green light to resume selling 2015 2.0-litre diesel engine models that are undergoing emissions modifications in two phases.

The U.S. regulators had already secured a $2.8-billion (U.S.) criminal penalty when the carmaker pleaded guilty as a result of a “long-running scheme” that deceived customers and circumvented standards with emissions-cheating software.

In Canada, the government’s investigation into certain Volkswagen vehicles with model years from 2009 to 2015 is still in progress.

“It would not be appropriate to comment on how (the sale of cars by Canadian dealers) may or may not impact the investigation,” Des Rosiers said.

The so-called defeat device in these vehicles meant cars met standards during emissions testing, but pumped out up to 40 times the permitted levels of harmful nitrogen oxides while on the open road, the U.S. Environmental Protection Agency (EPA) said.

Volkswagen has said the 2015 models for sale in the U.S. and Canada have been retrofitted with a software upgrade, and will receive a hardware fix when parts are available next year.

“Canada’s vehicle emission standards are aligned with those of the United States,” said Volkswagen Canada spokesperson Thomas Tetzlaff. “All vehicles are being modified in accordance with the approved emissions modification prior to sale.”

Volkswagen is co-operating with Environment Canada’s investigation, he said.
Meanwhile, Volkswagen dealers across the country have in recent weeks been selling 2015 diesel models, including Jettas and Golfs.

“While supplies last!” said the website for an Ottawa dealer that advertised a sale late last week. “These vehicles will not last long.”

As Volkswagen had voluntarily stopped sales of these vehicles in Canada, the company is not breaking any government orders or directions by resuming sales, the spokesperson for the environment minister said.

The cars had been frozen on dealers’ lots since late 2015, when U.S. regulators announced they were investigating the company for the emissions cheating.

Environment Canada began its own investigation around the same time.

“It is inappropriate for Volkswagen to make money off these cars before Canada has completed its investigation,” said Elaine MacDonald of EcoJustice, an environmental advocacy group in Toronto.

A company can face a maximum fine of $6 million (Canadian) per offence if convicted of violating Canadian vehicle emission regulations. The violating company may also have to forfeit any profits it earned as a result of the misconduct.

How is it the cars are back on the market? At Volkswagen and in the federal government, the Star found uncertainty and confusion.

A Volkswagen Canada spokesperson initially told the Star this week that the company was recently given an “exemption” by the federal government — similar to one granted in the U.S. — that allowed the 2015 vehicles back on the market.

This was confusing news to both Transport Canada and Environment Canada, which pointed the finger at each other as the agency responsible for such a possible exemption.

Then the Volkswagen spokesperson followed up to say no permission was asked for or given.

“Environment Canada, they don’t issue approval or rejections” in such situations, VW’s Tetzlaff said. “We informed them but they don’t say yes or no. We informed them so that they’re aware of it.”

In the United States, regulators allowed Volkswagen to resume selling its 2015 diesel models with updated emissions software. The vehicles will also receive repairs to the hardware at a later date.

This approval to sell the 2015 vehicles came after the company pleaded guilty to three criminal felony counts and agreed to pay a $2.8-billion (U.S.) penalty for misleading regulators and customers by using the emissions-cheating software.

The U.S. government also secured up to $14.7 billion in settlements from Volkswagen in connection with the diesel scandal. Nearly $3 billion of that money will go towards mitigating pollution from the affected vehicles.

In April, courts in Ontario and Quebec approved a $2.1-billion settlement in a class action lawsuit that offered cash payments to the roughly 105,000 people who had already bought or leased Volkswagen or Audi vehicles with 2.0-litre diesel engines. (Audi is owned by Volkswagen.) The settlement was not an admission of liability, Volkswagen said at the time in a statement.

Under the agreement, the drivers can choose to sell their vehicle back to Volkswagen, keep the vehicle and get an emissions modification, trade it in, or terminate the lease without penalty.

Volkswagen Canada and Audi Canada agreed to pay an additional $15-million penalty resulting from an investigation by the federal Competition Bureau, which said the companies misled consumers with false environmental marketing claims.

Volkswagen Canada’s Tetzlaff said he did not know how many 2015 models are for sale or have already been sold nationwide, though he said the cars, known for fuel efficiency, are especially popular at rural dealerships.