Volkswagen DieselGate Explained: NGT Slaps Fine, Company Objects

The NGT has ordered the German automaker to deposit Rs 100 crore with the CPCB by Friday.

Volkswagen India has been slapped with a fine of Rs 171 crore by the NGT on health grounds. 

(Photo: iStockphoto)

A National Green Tribunal (NGT) panel recently slapped Volkswagen India with a Rs 171 crore penalty, for allegedly failing to meet emission norms. The four-member NGT panel says the fine is for health damage caused in India due to excess NOx (nitrous oxide) emissions from some of Volkswagen’s diesel range of cars.

The NGT made its calculations based on pollution levels in Delhi. It has ordered the company to deposit Rs 100 crore with the Central Pollution Control Board (CPCB) by Friday. It threatened to arrest of some of its executives if the order is not complied with.

Why the Penalty?

This is a fallout of the global ‘dieselgate’ scandal, where Volkswagen was found to have installed cheat software in its diesel cars that could detect when a car was undergoing an emissions test and fudge the results.

However, Volkswagen is contesting the NGT’s recommendation. It states that all the vehicles that have been sold in the country are BS-IV emissions compliant, that is, they meet India’s current emissions standards.

The 'Dieselgate' scandal has already seen Volkswagen pay over $30 billion in fines and compensation globally, as well as recalls to retrofit some of its cars.

What is the DieselGate Scandal?

The Environmental Protection Agency (EPA) in the US found that Volkswagen group cars emitted nearly 40 times more than the stipulated levels of emissions on the road. During random emissions checks, the EPA figured that VW cars were fitted with a “cheat device”, where the car’s software detected it was undergoing an emissions test and modified the engine’s behaviour accordingly.

Volkswagen admitted to fitting cheat software to bypass emissions. The cars affected are its diesel engine models fitted with the EA 189 series of engines, manufactured between 2008 and 2015. This covers 11 million vehicles globally and about 3.23 lakh vehicles in India. This includes 198,500 Volkswagen models such as Polo, Vento, Jetta and Passat as well as 36,500 Audi vehicles.

Infographic: The Quint/Rahul Gupta  

What Action Did VW Take In India?

While Volkswagen undertook recalls and paid billions of dollars in fines in the US, the company was slow to act on recalls of its diesel fleet in India. Volkswagen India had in December 2015 announced the recall of 3,23,700 lakh vehicles in India to fix the emission software after ARAI conducted tests on some models and found that their on-road emissions were 1.1 times to 2.6 times higher than the applicable BS-IV norms.

In July 2018, the National Green Tribunal directed the German auto major to explain reasons for not recalling 3.23 lakh cars and warned of penal action. The green panel noted that the company has recalled only 64 per cent of cars as undertaken by it and 36 per cent of the polluting vehicles were still on roads.

What Happens to Volkswagen in India?

At the moment, the Volkswagen Group is contesting the allegations levelled by the NGT, saying that all its cars meet the current BS-IV regulations. However, ARAI data as shown earlier, says it is between 1.1 to 2.6 times higher.

The NGT says that VW group cars had released approximately 48.6 tonnes of additional NOx in 2016. This leads to the formation of smog and increases particulate matter emissions, leading to acid rain and ozone increases. This causes many respiratory illnesses, and hence the fine has been issued.

While Volkswagen continues to sell BS-IV compliant diesel cars in India, it is working to move towards BS-VI vehicles that will go on sale after 2020. Skoda India will henceforth be driving the groups expansion plans in the country.

The company recently issued a statement saying the cost of maintenance for its vehicles is now down 44 percent. However, its sales numbers are still not encouraging enough.

How Real is the NGT Threat?

The fact that the NGT can crackdown hard on automakers is not without precedent. In 2013, General Motors India, voluntarily issued a recall for 1.14 lakh Chevrolet Tavera multi-utility vehicles in the country, made between 2005 and 2013. It also halted sale of the Sail sedan and Sail U-Va hatchback temporarily.

During tests it was found that Chevrolet Tavera vehicles were emitting more than what BS-III emission norms (in force at that time) allowed. However, the vehicles that were sent to ARAI for tests passed without issues. It was then found that some executives in the company had colluded to specifically send ‘altered’ vehicles for testing, while the vehicles sold in the market were different.

To avoid litigation, the company issued a voluntary recall on the Tavera. An inter-ministerial fact-finding committee recommended a fine of Rs 11 crore on GM India for corporate fraud. In May 2017, General Motors stopped selling cars in India, although it still makes them in the country for exports only.