Volkswagen Canada halts some sales as emissions rigging scandal deepens

Volkswagen Canada has stopped sales of many of its diesel models in this country following revelations late last week that the automaker had rigged emissions tests for almost 500,000 diesel cars in the U.S.

"Volkswagen Canada has issued a stop-sale order to our dealers for all of the affected vehicles pending resolution of this matter," company spokesman Thomas Tetzlaff said in an email to CBC News on Monday.

• VW intentionally violated clean air standards, the U.S. EPA says

The stop-sale order, which echoed a similar order in the U.S., came three days after the U.S. Environmental Protection Agency (EPA) revealed that half a million diesel-powered VWs had been programmed to bypass emission controls, except during emissions tests.

In Canada, the affected diesel models include:

• The VW Jetta — model years 2009-15.
• The VW Golf — from 2010-15.
• The VW Beetle — from 2013-15.
• The VW Passat — from 2012-15.
• The VW Golf Wagon/Sportwagon — from 2009-15.  

Diesel-powered models account for 22 per cent of VW's Canadian sales.

Environment Canada told CBC News it collaborates on emissions verification activities with the U.S. EPA "to ensure our common environmental outcomes are achieved," and pointed out that its emissions standards are aligned with U.S. standards. 

In an email statement issued Monday, Environment Canada said it has "acted quickly to examine potential implications for Canada, and is in communications with its U.S. EPA counterparts and representatives of Volkswagen Group Canada Inc."

Defeat devices are prohibited under Canadian regulations, Environment Canada said, and promised to take action if violations to those regulations are found. 

The EPA and Environment Canada both stressed that the effectiveness of a vehicle's air pollutant control devices is not a safety issue and the cars remain legal to drive. But the EPA said they are a threat to public health.

Automotive consumer advocate Phil Edmonston, who authors the annual Lemon-Aid used car and truck guide, said he was surprised by the Volkswagen news.

"Up until now, VW has been a pretty upstanding company," he told CBC News.

So why take the risk? "Diesel engines are hard to clean up," Edmonston noted, musing that the rigged emissions tests may have been a short cut.  

Volkswagen CEO 'deeply sorry'

Volkswagen's CEO apologized but investors were not in a forgiving mood as the company's stock plunged more than 17 per cent Monday, chopping the market value of VW's stock by more than $19 billion Cdn.

"I personally am deeply sorry that we have broken the trust of our customers and the public," Martin Winterkorn said in a weekend statement.

The EPA ordered VW to fix the cars and VW said it would co-operate with regulators. But the damage to the automaker's image is nothing less than catastrophic.

VW had marketed its diesel-powered cars as being better for the environment. The EPA said the VW cars under investigation seemed to pass emissions tests, but in the real world, were actually emitting up to 40 times the national standard for nitrogen oxide, which is linked to asthma and lung illnesses. 

"A sophisticated software algorithm on certain Volkswagen vehicles detects when the car is undergoing official emissions testing, and turns full emissions controls on only during the test," the EPA said in its notice of violation.

Consumer Reports announced it would remove its "recommended" rating from the Jetta and Passat diesels until it can retest the vehicles. 

VW could face fines of up to $18 billion US, according to the EPA. 

"The company will have to recall nearly 500,000 affected cars, which will cost it millions of dollars, and that's even before the damage to its brand and potential fines," said Michael Hewson, chief market analyst at CMC Markets.

Criminal probe

The damage to Volkswagen could go beyond the financial. The U.S. Justice Department has launched a criminal probe over the rigged emissions tests, Bloomberg reported on Monday, citing two U.S. officials familiar with the inquiry.

On Monday, the EPA announced it would test other diesel vehicles to see if they are using the same kind of "defeat device" software that deceived regulators in the VW case. 

Several law firms in Canada and the United States have announced plans for class action lawsuits against Volkswagen.