William Maley

Lexus executives admit there are some holes in their lineup such as not having a subcompact or three-row crossover. Speaking with Automotive News, Lexus General Manager Jeff Bracken said the brand is losing as many as 70,000 potential vehicle sales by not competing in certain segments. "We do think there's room to fill some gaps that still exist for Lexus," said Bracken. One possibility is introducing a subcompact crossover possibly with a production version of the UX concept. "That's a gap we are watching very closely. We're very fixated on trying to move that conversation forward with our parent corporation." Also up for consideration is a three-row crossover and expanding the F-series performance family - might include an LC-F. One surprise to come out is Lexus doing an electric vehicle. According to Bracken, the brand started investigating possibilities after the Paris Motor Show where many European luxury automakers pushed this idea. "It was amazingly focused. Subsequent to that show, from my standpoint, we began conversations with our product planners," said Bracken. Source: Automotive News (Subscription Required) View full article

Infiniti has toyed with the idea of an electric vehicle with the Emerg-e and LE concepts. But it seems they are finally going forward with this idea. Infiniti boss Roland Krueger tells Autocar the luxury automaker is planning to launch a new electric vehicle within the next three years. Work is already underway as Krueger revealed that he has driven an early prototype of said vehicle. Not many details were given except that the model would be using a new platform and maintain "Infiniti's values of performance and handling." Expect Infiniti to pull some help from Nissan with this new model. Source: Autocar View full article

Infiniti has toyed with the idea of an electric vehicle with the Emerg-e and LE concepts. But it seems they are finally going forward with this idea. Infiniti boss Roland Krueger tells Autocar the luxury automaker is planning to launch a new electric vehicle within the next three years. Work is already underway as Krueger revealed that he has driven an early prototype of said vehicle. Not many details were given except that the model would be using a new platform and maintain "Infiniti's values of performance and handling." Expect Infiniti to pull some help from Nissan with this new model. Source: Autocar View full article

A day after the EPA announced an investigation into possible emission violations with Fiat Chrysler Automobiles' 3.0L EcoDiesel V6, the Department of Justice has now opened its own investigation. Bloomberg has learned from sources that the U.S. Justice Department has opened a criminal investigation into FCA's possible violations of the Clean Air Act. As we reported yesterday, the EPA said FCA did not disclose eight different software programs used on the 3.0L EcoDiesel V6. In lab tests, the engine used in the Jeep Grand Cherokee and Ram 1500 exceeded more emissions when driven at high speeds or for extended periods. We should note this isn't the only investigation being done by the DOJ into FCA. Last year, the DOJ started investigating the company over possible fraud for inflating sales numbers. FCA did not respond when asked by Bloomberg for a comment. A DOJ spokesman declined to comment. Source: Bloomberg View full article

We have known for a couple of years that Holden will end Australian production in 2017. Today, Holden announced that October 20th, 2017 will be the final day of production at their Elizabeth plant. This will end over 60 years of production at the plant. “While this confirmation isn’t a surprise for anyone and we’ve been working toward this for nearly four years, we can now confirm the actual date for our people and our suppliers. Putting our people first and foremost has always been our highest priority,” said Richard Phillips, Holden's Executive Director of Manufacturing in a statement. Before that date arrives, Holden plans on building 30,000 Commodores, Utes and Caprices at the plant. These will include some rumored high-performance models of the Commodore. Workers at the plant and suppliers were notified of the date the day before. “This October may bring to a close more than 60 years of vehicle manufacturing by Holden at Elizabeth but I know it will be business as usual for our manufacturing workforce until then – we have tens of thousands of world-class cars to build in coming months and I know we all want to see Holden have great success in Australia for many years to come," said Philips. This leaves Toyota as the only automaker who hasn't announced when it will end production in Australia. A spokesman told CarAdvice that a date would be announced before the end of the first quarter. Ford already ended Australian production last October. Source: CarAdvice, Holden Press Release is on Page 2 HOLDEN CONFIRMS OCTOBER 20 FOR END OF PRODUCTION AND FINAL TRANSITION TO VEHICLE IMPORTER; PROVIDES CERTAINTY TO EMPLOYEES AND SUPPLY CHAIN NETWORK Holden manufacturing continues until October 20, 2017. More than 30,000 vehicles to be built before manufacturing ends. Nearly 70% of Holden’s Elizabeth employees have secured jobs within 12 months of leaving. Holden to retain more than 300 designers and engineers in addition to 10,000 employees at Melbourne headquarters, Proving ground, Design Studio and across 230-strong national Holden dealer network. Holden today has confirmed it will continue manufacturing in Australia until October 20, 2017, when the final car will be built at its Elizabeth plant and Holden becomes a national sales company and vehicle importer for the long-term in Australia. Today Holden’s manufacturing workforce in Adelaide were the first to be told the company will fulfill its 2013 commitment to manufacture vehicles at its Elizabeth plant until the final quarter of 2017. Holden Executive Director of Manufacturing, Richard Phillips, said that Holden’s overriding priority is giving employees and suppliers advance notice and providing certainty. “While this confirmation isn’t a surprise for anyone and we’ve been working toward this for nearly four years, we can now confirm the actual date for our people and our suppliers. Putting our people first and foremost has always been our highest priority,” Mr Phillips said. “This October may bring to a close more than 60 years of vehicle manufacturing by Holden at Elizabeth but I know it will be business as usual for our manufacturing workforce until then – we have tens of thousands of world-class cars to build in coming months and I know we all want to see Holden have great success in Australia for many years to come. “Every day our employees exhibit professionalism and passion for achieving quality. We are categorically building the best cars Holden has ever built and that is backed up by internal and external data. They simply are a fantastic team that will ensure our last locally-made car is also our best car ever.” Holden has assembled vehicles for domestic and export markets at the Elizabeth plant since 1963 and will continue to manufacture the world-class Holden Commodore range there until October 20, with nearly 1000 employees remaining at the Elizabeth plant in production, engineering and support roles until production ends. There are no plans for any further workforce reductions ahead of October 20. Of the nearly 700 people who have left Holden’s Elizabeth plant since 2015, 80 per cent have successfully transitioned within 12 months of leaving (69 per cent employed, 5 per cent in training, 3 per cent have retired and 3 per cent are volunteering). Holden’s Transition Support program will continue to prepare job seekers for new careers and support those opting for retirement until well after the factory closes. During 2016, the Elizabeth plant was recognised with two awards for safety and financial performance within General Motors International. All Holden employees leaving the business have access to a suite of transition services and up to $3000 in approved training and $500 for financial advice - all part of Holden’s $15 million contribution to the federal government-led Growth Fund for specific support of automotive manufacturing employees. Holden’s Transition Centre was opened at its Elizabeth plant in 2014 to provide a range of support services including information sessions, workshops, career counselling, employment expos, resume writing, interview skills preparation and more. Holden Chairman and Managing Director, Mark Bernhard, said Holden’s manufacturing workforce had set new benchmarks for quality and performance in the past four years. “They have continually pushed to improve the quality of their work for the benefit of our customers – this commitment, continuous improvement attitude and passion have been exhibited in spades in challenging circumstances,” Mr Bernhard said. “It’s not surprising that their skills, work ethic and flexibility are highly sought after and they are leaving a legacy for Holden that deserves to be honoured by ensuring this company has a bright and successful future. “Holden continues to change but we are proud to retain a significant presence in Australia for the long-term that includes more than 300 people across our local design and engineering workforces, in addition to the approximately 700 corporate staff and 10,000 people employed across our dealer network. Holden remains committed to Australia and our customers for many, many years to come”. Holden Transition Support Holden acknowledges the impact the end of local manufacturing has on our people and their families, across the country and throughout the industry. We are doing everything in our power to allow our people to make considered choices and help them move onto their next opportunity. Every Holden worker leaving the business has access to a suite of transition services and up to $3000 in approved training; all part of Holden’s $15 million contribution to the federal government’s Growth Fund for specific support of our manufacturing and engineering employees. The Transition Centre established at Holden’s Elizabeth plant is open to employees, contractors and supplier employees. As a result of Holden’s world-class transition services, about 80 per cent of people who have left the business have gone on to find other work. This does not include those who chose to retire or made personal decisions not to seek work. Holden has proactively engaged with HR and business leaders in South Australia and interstate, who have toured the Elizabeth site and viewed the variety of skills and capabilities of our workforce. Employees who have secured another job have been able to access an early voluntary separation package, helping them to take up opportunities. Holden’s Transition Centre at Elizabeth opened in 2014, after significant research into global best practice and consultation with employees and partner organisations. Support and services for employees includes: Up to $3000 training funds Career counselling Financial advice and superannuation support Coaching sessions to develop individual tailored plans Information on career pathways, training providers and courses Industry information sessions Careers and training expos Computer training Jobs vacancy board Dedicated staff to help answer questions Resume and job application writing workshops Interview training Networking training Job search training Department of Human Services (representatives and self-service kiosks) Resume writing workshops NewAccess program (BeyondBlue/BeyondAuto) Future of Holden: Holden will launch 24 major vehicles and 36 new drivetrain combinations by the end of 2020 Holden vehicles will continue to be tuned and tested for Australian conditions and customers with the retention of the famous Lang Lang Proving Ground in Victoria, along with advanced engineering capabilities Holden’s Global Design centre continues to be based in Port Melbourne, contributing to local and global product programs Holden will retain more than 300 designers and engineers beyond 2017 This is in addition to approximately 700 corporate staff and 10,000 people employed across the 230-strong Holden dealer network More than one-third of Holden’s future product portfolio will be sourced from Europe; with vehicles also being sourced from North America and Asia The esteemed Commodore nameplate will live on from 2018 with Holden’s next-generation large car Home Ground Advantage, Holden’s $5 million, 10-year commitment to grassroots sporting clubs has been a huge success with more than 5000 entries since launch Holden has launched the biggest Capped Price Servicing Program in the country, covering every Holden ever built. 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While the big story for Honda at the Detroit Auto show was the 2018 Odyssey minivan, there was another announcement that was left as a footnote. For 2018, Honda will introduce a new dedicated hybrid model. This is part of Honda’s overall electrification strategy, where it plans half of its new vehicle reveals within the next years will have some sort of electric-drive technology. By 2030, the automaker hopes two-thirds of their vehicle sales from electrified vehicles. Not many details were released on the new hybrid model except that it would be “two-motor hybrid system.” Honda also announced that the two-motor hybrid system would appear on its light-truck lineup. Possible candidates include the CR-V, Odyssey, and Pilot. Source: Honda Press Release is on Page 2 Honda Adds All-New Dedicated Hybrid Model to Growing Electrified Lineup Jan 9, 2017 - DETROIT New hybrid model will be made in America and launch in 2018 Two-motor hybrid system to be applied to light truck lineup More than half of all new models launching in next two years will be electrified vehicles Honda today announced a new dedicated hybrid model that will be made in America and launch nationwide in 2018, as part of the Honda Electrification Initiative, which will expand the company's portfolio of electrified vehicles. Honda also announced it will expand the use of its innovative two-motor hybrid powertrain from passenger cars to its light truck lineup in the future. "Half of the all-new models Honda will launch in the United States in the coming two years will be electrified vehicles," said Takahiro Hachigo, President & CEO of Honda Motor Co., Ltd. "In the long term, electrified vehicles are key to the future of carbon-free mobility." Honda set a global target for two-thirds of all sales to come from electrified models by 2030 and to halve its total company CO2 emissions from 2000 levels by 2050. The new, dedicated hybrid vehicle will utilize Honda's innovative two-motor hybrid system, which is currently deployed in the 49 mpg Accord Hybrid, the most fuel-efficient midsize sedan in America. The new model will be produced at an existing plant in the United States. Additional details on the vehicle and its manufacturing will be announced closer to launch. In December 2016, Honda began the launch of its new Clarity series of electrified vehicles, starting with the Clarity Fuel Cell. The Clarity Fuel Cell is available through select California Honda dealers and boasts the highest range of any zero-emissions vehicle in America with its 366-mile EPA range rating.1 This year, Honda will launch the Clarity Electric and the Clarity Plug-In Hybrid, as the two remaining models in its Clarity series of premium midsize electrified vehicles. View full article

It was an exciting day when Ford announced that the Ranger and Bronco would be coming back. But then disappointment arrived as an alleged Ford employee said on Reddit that the Bronco would be a slightly re-worked Everest SUV (cue sad trombone). A Ford executive has cleared the air somewhat on the Bronco, and it is good news. Ford's Chief Technical Officer Raj Nair told Autoline in an interview that while the Bronco would be based on the Ranger/Everest platform, it would be its own vehicle. “No, it’s a separate vehicle. It will be an incremental vehicle from the Everest. The Everest kind of serves a lot of off-road capability; maybe the space of the Explorer serves here in the U.S., but with a body-on-frame construction with a lot more off-road capability for the rest of the world. This Bronco is completely unique from that Everest. It is body-on-frame and so again, focusing on that off-road capability.” Nair also revealed that the Bronco would be somewhere in between the small Bronco (1966-1977) and big Bronco (1992-1996). “This new Bronco will be based off the Ranger platform and so it’s going to be a similarly sized vehicle to what you see in the Ranger. Now, for our American customers who have never seen that global Ranger, it’s a bit bigger than the Ranger we used to have here in the U.S., so I would say it’s kind of in-between in what you saw with that really big Bronco and then the smaller Bronco,” said Nair. So everyone, take a deep breath. It seems that it is going to be ok. Source: Autoline View full article

It is no secret that Bentley is working on a plug-in hybrid variant of the Bentayga SUV due out next year. But Bentley CEO Wolfgang Duerheimer revealed that all of their models would have the option of a plug-in hybrid in the coming years. Speaking at the Automotive News World Conference, Duerheimer said this powertrain provides the best of two worlds - allowing owners to drive their vehicles on electric power only in cities where gas engines might be restricted and traveling for long distances without having to recharge the battery. “To cover long distances and to make it from one city to another -- and you travel long distances in the U.S. -- I think the combustion engine will follow us for a long time,” Duerheimer said. Following the Bentayga, the next-generation Continental GT will be the next model to get a plug-in hybrid option. Source: Automotive News (Subscription Required) View full article

Fiat Chrysler Automobiles finds itself in hot water, this time with the EPA. During a conference call this morning, the agency accused FCA of violating diesel emission standards on 104,000 Jeep Grand Cherokee and Ram 1500 models equipped with the 3.0L EcoDiesel from 2014 to 2016. They are also accused of failing to disclose eight different software programs. The EPA alleges the software used on these models allowed them to produce excess pollution. At the moment, the EPA isn't calling the software a defeat device as FCA haven't explained the purpose of this software. “Failing to disclose software that affects emissions in a vehicle’s engine is a serious violation of the law, which can result in harmful pollution in the air we breathe. We continue to investigate the nature and impact of these devices,” said Cynthia Giles, assistant administrator for EPA’s Office of Enforcement and Compliance Assurance in a statement. In lab tests done by the EPA, the 3.0L EcoDiesel meet emission standards. But at high speeds or driving for extended periods, the effectiveness of the emission's system was reduced by the software. This possibly explains why the 2017 Grand Cherokee and Ram 1500 EcoDiesel haven't been given the ok by the EPA as we reported last year. The EPA says there is no immediate action for owners to take as the vehicles are safe and legal to drive while the investigation continues. FCA could be fined as much $44,539 per vehicle if they are found to be violating the Clean Air Act (about $4.6 billion). In a statement obtained by Bloomberg, FCA said it “intends to work with the incoming administration to present its case and resolve this matter fairly and equitably and to assure the EPA and FCA US customers that the company's diesel-powered vehicles meet all applicable regulatory requirements." FCA's stock price dropped 16 percent to $9.30 after the news broke. Soon after, trading on the stock was halted. We'll be watching this and update this story as more information comes in. Source: Reuters, Bloomberg , USA Today , EPA, FCA Press Releases are on Page 2 EPA Notifies Fiat Chrysler of Clean Air Act Violations FCA allegedly installed and failed to disclose software that increases air pollution from vehicles WASHINGTON – The U.S. Environmental Protection Agency (EPA) today issued a notice of violation to Fiat Chrysler Automobiles N.V. and FCA US LLC (collectively FCA) for alleged violations of the Clean Air Act for installing and failing to disclose engine management software in light-duty model year 2014, 2015 and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks with 3.0 liter diesel engines sold in the United States. The undisclosed software results in increased emissions of nitrogen oxides (NOx) from the vehicles. The allegations cover roughly 104,000 vehicles. EPA is working in coordination with the California Air Resources Board (CARB), which has also issued a notice of violation to FCA. EPA and CARB have both initiated investigations based on FCA’s alleged actions. “Failing to disclose software that affects emissions in a vehicle’s engine is a serious violation of the law, which can result in harmful pollution in the air we breathe,” said Cynthia Giles, Assistant Administrator for EPA’s Office of Enforcement and Compliance Assurance. “We continue to investigate the nature and impact of these devices. All automakers must play by the same rules, and we will continue to hold companies accountable that gain an unfair and illegal competitive advantage.” “Once again, a major automaker made the business decision to skirt the rules and got caught,” said CARB Chair Mary D. Nichols. “CARB and U.S. EPA made a commitment to enhanced testing as the Volkswagen case developed, and this is a result of that collaboration.” The Clean Air Act requires vehicle manufacturers to demonstrate to EPA through a certification process that their products meet applicable federal emission standards to control air pollution. As part of the certification process, automakers are required to disclose and explain any software, known as auxiliary emission control devices, that can alter how a vehicle emits air pollution. FCA did not disclose the existence of certain auxiliary emission control devices to EPA in its applications for certificates of conformity for model year 2014, 2015 and 2016 Jeep Grand Cherokees and Dodge Ram 1500 trucks, despite being aware that such a disclosure was mandatory. By failing to disclose this software and then selling vehicles that contained it, FCA violated important provisions of the Clean Air Act. FCA may be liable for civil penalties and injunctive relief for the violations alleged in the NOV. EPA is also investigating whether the auxiliary emission control devices constitute “defeat devices,” which are illegal. In September 2015, EPA instituted an expanded testing program to screen for defeat devices on light duty vehicles. This testing revealed that the FCA vehicle models in question produce increased NOx emissions under conditions that would be encountered in normal operation and use. As part of the investigation, EPA has found at least eight undisclosed pieces of software that can alter how a vehicle emits air pollution. FCA US Response to EPA January 12, 2017 , Auburn Hills, Mich. - FCA US is disappointed that the EPA has chosen to issue a notice of violation with respect to the emissions control technology employed in the company’s 2014-16 model year light duty 3.0-liter diesel engines. FCA US intends to work with the incoming administration to present its case and resolve this matter fairly and equitably and to assure the EPA and FCA US customers that the company’s diesel-powered vehicles meet all applicable regulatory requirements. FCA US diesel engines are equipped with state-of-the-art emission control systems hardware, including selective catalytic reduction (SCR). Every auto manufacturer must employ various strategies to control tailpipe emissions in order to balance EPA’s regulatory requirements for low nitrogen oxide (NOx) emissions and requirements for engine durability and performance, safety and fuel efficiency. FCA US believes that its emission control systems meet the applicable requirements. FCA US has spent months providing voluminous information in response to requests from EPA and other governmental authorities and has sought to explain its emissions control technology to EPA representatives. FCA US has proposed a number of actions to address EPA’s concerns, including developing extensive software changes to our emissions control strategies that could be implemented in these vehicles immediately to further improve emissions performance. FCA US looks forward to the opportunity to meet with the EPA’s enforcement division and representatives of the new administration to demonstrate that FCA US’s emissions control strategies are properly justified and thus are not “defeat devices” under applicable regulations and to resolve this matter expeditiously. View full article

In 2009, Cadillac was gearing up to launch the brand in Australia. A small number of dealers had signed up to begin selling a right-hand drive version of CTS. But weeks before the launch, plans were axed. The economic crisis and fluctuations in various currencies were the reasons given. But in the past couple of years, various GM executives have said the brand will be coming to Australia and pictures have surfaced of various Cadillac models in the country. However, head of General Motors International Stefan Jacoby poured a bucket of cold water on this, telling Australian media at the Detroit Auto Show that the time isn't right for Cadillac to enter Australia. "We have no plans for that," said Jacoby. "First of all we should manage Holden and then we should look to Cadillac." Holden is currently transitioning from relying heavily on the Commodore to expanding their lineup comprised of vehicles coming from around the world. Already, Holden has launched the Astra Hatchback and will soon be launching the Astra sedan (Chevrolet Cruze) and Acadia. Once Holden is successful with this, Jacoby said they would revisit the idea of Cadillac in Australia. Cadillac chief designer Andrew Smith (who happens to be a Holden alum) tells Drive.com.au that he would like to see Cadillacs on Australian roads, but only when the time is right. "We're talking about Cadillac in Australia and I see it as a really good fit, but it is a futile exercise until you have exactly the portfolio you need," said Smith. "I think the Australian market is an interesting one, it's always been a mix of the European market and the American tastes. Even though we like to think it is European certainly American tastes are similar. But again it's about having everything we need to make sure we can launch it properly." Source: Drive.com.au View full article

Trying to figure out the fate of the Jeep Wagoneer/Grand Wagoneer has been quite daunting. One minute, the project has been canned. The next, it has been put on hold. But now the air has been cleared as to the Wagoneer project. Fiat Chrysler Automobiles' CEO Sergio Marchionne confirmed this week at Detroit Auto Show that the Wagoneer and Grand Wagoneer would use a body-on-frame chassis that will underpin the next-generation Ram 1500, not the unibody platform that we have been hearing for the past couple of years. Jeep CEO Mike Manley told Car and Driver that the Grand Wagoneer would use a stretched version. “It’s a place we’ve been, we walked away from it, now we’re going to be strong again,” said Manley, referring to the previous Grand Wagoneer. The two models will be built at a retooled Warren Truck Assembly plant, home to the current Ram 1500. Marchionne said the models would arrive by 2020. Source: Automotive News (Subscription Required), Car and Driver View full article

Volkswagen will be cutting another big check. Today, the company announced that it had reached a settlement with Department of Justice over the criminal case on the diesel emission scandal. Volkswagen will plead guilty to three criminal felony charges and will pay $4.3 billion - $2.8 billion for the fine and $1.5 billion to settle civil cases. The settlement also requires an independent monitor to watch over the company for the next years. Volkswagen's board still needs to approve this settlement, but the company says the approval could happen today or tomorrow. If they waited, the parties would have to do it all over again with new people coming as part of President-elect Trump's team. “Today’s actions reflect the Justice Department’s steadfast commitment to defending consumers, protecting our environment and our financial system and holding individuals and companies accountable for corporate wrongdoing. In the days ahead, we will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government. And we will continue to pursue the individuals responsible for orchestrating this damaging conspiracy,” said Attorney General Loretta E. Lynch in a statement. In addition, six Volkswagen executives and employees have been charged with their involvement in the scandal. They include, Richard Dorenkamp - In charge of Volkswagen’s Engine Development After-Treatment Department from 2003 to 2013. This department is where the cheat was developed. Bernd Gottweis - Volkswagen's supervisor responsible for Quality Management and Product Safety between 2007 to October 2014. Jens Hadler - Head of powertrain development from 2007 to 2011. Heinz-Jakob Neusser - Head of powertrain development from 2011 to 2013, suspended by Volkswagen back in 2015. Jürgen Peter - Worked in Volkswagen's Quality Management and Product Safety Group from 1990 to now. For a few months in 2015, he was a liaison for various regulatory agencies. Oliver Schmidt - Volkswagen's liaison with U.S. environmental regulators. He was arrested on Sunday in Miami as he was returning to Germany. Source: Department of Justice, Bloomberg, Reuters Press Release is on Page 2 Volkswagen AG Agrees to Plead Guilty and Pay $4.3 Billion in Criminal and Civil Penalties; Six Volkswagen Executives and Employees are Indicted in Connection with Conspiracy to Cheat U.S. Emissions Tests VW to Pay $2.8 Billion Criminal Fine in Guilty Plea and $1.5 Billion Settlement of Civil Environmental, Customs and Financial Violations; Monitor to Be Appointed to Oversee the Parent Company Volkswagen AG (VW) has agreed to plead guilty to three criminal felony counts and pay a $2.8 billion criminal penalty as a result of the company’s long-running scheme to sell approximately 590,000 diesel vehicles in the U.S. by using a defeat device to cheat on emissions tests mandated by the Environmental Protection Agency (EPA) and the California Air Resources Board (CARB), and lying and obstructing justice to further the scheme, the Justice Department announced today. In separate civil resolutions of environmental, customs and financial claims, VW has agreed to pay $1.5 billion. This includes EPA’s claim for civil penalties against VW in connection with VW’s importation and sale of these cars, as well as U.S. Customs and Border Protection (CBP) claims for customs fraud. In addition, the EPA agreement requires injunctive relief to prevent future violations. The agreements also resolve alleged violations of the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA). The Criminal Case: VW is charged with and has agreed to plead guilty to participating in a conspiracy to defraud the United States and VW’s U.S. customers and to violate the Clean Air Act by lying and misleading the EPA and U.S. customers about whether certain VW, Audi and Porsche branded diesel vehicles complied with U.S. emissions standards, using cheating software to circumvent the U.S. testing process and concealing material facts about its cheating from U.S. regulators. VW is also charged with obstruction of justice for destroying documents related to the scheme, and with a separate crime of importing these cars into the U.S. by means of false statements about the vehicles’ compliance with emissions limits. Under the terms of the plea agreement, which must be accepted by the court, VW will plead guilty to all these crimes, will be on probation for three years, will be under an independent corporate compliance monitor who will oversee the company for at least three years, and agrees to fully cooperate in the Justice Department’s ongoing investigation and prosecution of individuals responsible for these crimes. In addition, a federal grand jury in the Eastern District of Michigan returned an indictment today charging six VW executives and employees for their roles in the nearly 10-year conspiracy. Heinz-Jakob Neusser, 56; Jens Hadler, 50; Richard Dorenkamp, 68; Bernd Gottweis, 69; Oliver Schmidt, 48; and Jürgen Peter, 59, all of Germany, are charged with one count of conspiracy to defraud the United States, defraud VW’s U.S. customers and violate the Clean Air Act by making false representations to regulators and the public about the ability of VW’s supposedly “clean diesel” vehicles to comply with U.S. emissions requirements. The indictment also charges Dorenkamp, Neusser, Schmidt and Peter with Clean Air Act violations and charges Neusser, Gottweis, Schmidt and Peter with wire fraud counts. This case has been assigned to U.S. District Judge Sean F. Cox of the Eastern District of Michigan. Schmidt was arrested on Jan. 7, 2017, in Miami during a visit to the United States and appeared in federal court there on Monday. The other defendants are believed to presently reside in Germany. Today’s announcement was made by Attorney General Loretta E. Lynch, EPA Administrator Gina McCarthy and Assistant Administrator Cynthia Giles, Deputy Attorney General Sally Q. Yates, FBI Deputy Director Andrew McCabe, Acting Deputy Secretary Russell C. Deyo for the Department of Homeland Security, U.S. Attorney Barbara L. McQuade of the Eastern District of Michigan, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Assistant Attorney General John C. Cruden of the Justice Department’s Environment and Natural Resources Division and Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division. “Volkswagen’s attempts to dodge emissions standards and import falsely certified vehicles into the country represent an egregious violation of our nation’s environmental, consumer protection and financial laws,” said Attorney General Lynch. “Today’s actions reflect the Justice Department’s steadfast commitment to defending consumers, protecting our environment and our financial system and holding individuals and companies accountable for corporate wrongdoing. In the days ahead, we will continue to examine Volkswagen’s attempts to mislead consumers and deceive the government. And we will continue to pursue the individuals responsible for orchestrating this damaging conspiracy.” “When Volkswagen broke the law, EPA stepped in to hold them accountable and address the pollution they caused,” said EPA Administrator McCarthy. “EPA’s fundamental and indispensable role becomes all too clear when companies evade laws that protect our health. The American public depends on a strong and active EPA to deliver clean air protections, and that is exactly what we have done.” “This wasn’t simply the action of some faceless, multinational corporation,” said Deputy Attorney General Yates. “This conspiracy involved flesh-and-blood individuals who used their positions within Volkswagen to deceive both regulators and consumers. From the start of this investigation, we’ve been committed to ensuring that those responsible for criminal activity are held accountable. We’ve followed the evidence—from the showroom to the boardroom—and it brought us to the people whose indictments we’re announcing today.” “Americans expect corporations to operate honestly and provide accurate information,” said Deputy Director McCabe. “Volkswagen’s data deception defrauded the U.S. government, violated the Clean Air Act and eroded consumer trust. This case sends a clear message to corporations, no matter how big or small, that if you lie and disregard rules that protect consumers and the environment, you will be caught and held accountable.” “Blatant violations of U.S. customs and environmental laws will not be tolerated, and this case reinforces that,” said Acting Deputy Secretary Deyo. “These actions put our economy, consumers and citizens at risk, and the Department of Homeland Security and U.S. Customs and Border Protection will continue to take every step necessary to protect the American people.” According to the indictment, the individuals occupied the following positions within the company: Heinz-Jakob Neusser: from July 2013 until September 2015, Neusser worked for VW as head of Development for VW Brand and was also on the management board for VW Brand. From October 2011 until July 2013, Neusser served as the head of Engine Development for VW. Jens Hadler: from May 2007 until March 2011, Hadler worked for VW as head of Engine Development for VW. Richard Dorenkamp: from 2003 until December 2013, Dorenkamp worked for VW as the head of VW’s Engine Development After-Treatment Department in Wolfsburg, Germany. From 2006 until 2013, Dorenkamp led a team of engineers that developed the first diesel engine that was designed to meet the new, tougher emissions standards in the United States. Bernd Gottweis: from 2007 until October 2014, Gottweis worked for VW as a supervisor with responsibility for Quality Management and Product Safety. Oliver Schmidt: from 2012 through February 2015, Schmidt was the General Manager in charge of the Environment and Engineering Office, located in Auburn Hills, Michigan. From February 2015 through September 2015, Schmidt returned to VW headquarters to work directly for Neusser, including on emissions issues. Jürgen Peter: Peter worked in the VW Quality Management and Product Safety Group from 1990 until the present. From March 2015 until July 2015, Peter was one of the VW liaisons between the regulatory agencies and VW. According to the charging documents and statement of facts filed with the court, in 2006, VW engineers began to design a new diesel engine to meet stricter U.S. emissions standards that would take effect by model year 2007. This new engine would be the cornerstone of a new project to sell diesel vehicles in the United States that would be marketed to buyers as “clean diesel,” a project that was an important strategic goal for VW’s management. When the co-conspirators realized that they could not design a diesel engine that would both meet the stricter NOx emissions standards and attract sufficient customer demand in the U.S. market, they decided they would use a software function to cheat standard U.S. emissions tests. VW engineers working under Dorenkamp and Hadler designed and implemented a software to recognize whether a vehicle was undergoing standard U.S. emissions testing on a dynamometer or it was being driven on the road under normal driving conditions. The software accomplished this by recognizing the standard published drive cycles. Based on these inputs, if the vehicle’s software detected that it was being tested, the vehicle performed in one mode, which satisfied U.S. NOx emissions standards. If the software detected that the vehicle was not being tested, it operated in a different mode, in which the vehicle’s emissions control systems were reduced substantially, causing the vehicle to emit NOx up to 40 times higher than U.S. standards. Disagreements over the direction of the project were articulated at a meeting over which Hadler presided, and which Dorenkamp attended. Hadler authorized Dorenkamp to proceed with the project knowing that only the use of the defeat device software would enable VW diesel vehicles to pass U.S. emissions tests. Starting with the first model year 2009 of VW’s new “clean diesel” engine through model year 2016, Dorenkamp, Neusser, Hadler and their co-conspirators installed, or caused to be installed, the defeat device software into the vehicles imported and sold in the United States. In order to sell their “clean diesel” vehicles in the United States, the co-conspirators lied to the EPA about the existence of their test-cheating software, hiding it from the EPA, CARB, VW customers and the U.S. public. Dorenkamp, Neusser, Hadler, Gottweis, Schmidt, Peter and their co-conspirators then marketed, and caused to be marketed, VW diesel vehicles to the U.S. public as “clean diesel” and environmentally-friendly. Around 2012, hardware failures developed in certain of the diesel vehicles. VW engineers believed the increased stress on the exhaust system from being driven in the “dyno mode” could be the cause of the hardware failures. In July 2012, VW engineers met with Neusser and Gottweis to explain what they believed to be the cause of the hardware failures and explained the defeat device. Gottweis and Neusser each encouraged further concealment of the software. In 2014, the co-conspirators perfected their cheating software by starting the vehicle in “street mode,” and, when the defeat device realized the vehicle was being tested, switching to the “dyno mode.” To increase the ability of the vehicle’s software to recognize that it was being tested on the dynamometer, the VW engineers activated a “steering wheel angle recognition feature.” With these alterations, it was believed the stress on the exhaust system would be reduced because the engine would not be operating for as long in “dyno mode.” The new function was installed in existing vehicles through software updates. The defendants and other co-conspirators falsely represented, and caused to be represented, to U.S. regulators, U.S. customers and others that the software update was intended to improve durability and emissions issues in the vehicles when, in fact, they knew it was used to more quickly deactivate emission control systems when the vehicle was not undergoing emissions tests. After years of VW selling their “clean diesel” vehicles in the United States that had the cheating software, in March 2014, West Virginia University’s Center for Alternative Fuels, Engines and Emissions published the results of a study commissioned by the International Council on Clean Transportation (ICCT). The ICCT study identified substantial discrepancies in the NOx emissions from certain VW vehicles when tested on the road compared to when these vehicles were undergoing EPA and CARB standard drive cycle tests on a dynamometer. Rather than tell the truth, VW employees, including Neusser, Gottweis, Schmidt and Peter, pursued a strategy to disclose as little as possible – to continue to hide the existence of the software from U.S. regulators, U.S. customers and the U.S. public. Following the ICCT study, CARB, in coordination with the EPA, attempted to work with VW to determine the cause for the higher NOx emissions in VW diesel vehicles when being driven on the road as opposed to on the dynamometer undergoing standard emissions test cycles. To do this, CARB, in coordination with the EPA, repeatedly asked VW questions that became increasingly more specific and detailed, and tested the vehicles themselves. In implementing their strategy of disclosing as little as possible, Neusser, Gottweis, Schmidt, Peter and their co-conspirators provided EPA and CARB with testing results, data, presentations and statements in an attempt to make it appear that there were innocent mechanical and technological problems to blame, while secretly knowing that the primary reason for the discrepancy was their cheating software that was installed in every VW diesel vehicle sold in the United States. The co-conspirators continued this back-and-forth with the EPA and CARB for over 18 months, obstructing the regulators’ attempts to uncover the truth. The charges in the indictment are merely accusations and each defendant is presumed innocent unless and until proven guilty. The case was investigated by the FBI and EPA-CID. The prosecution and corporate investigation are being handled by Securities and Financial Fraud Unit Chief Benjamin D. Singer and Trial Attorneys David Fuhr, Alison Anderson, Christopher Fenton and Gary Winters of the Criminal Division’s Fraud Section; Trial Attorney Jennifer Blackwell of the Environment and Natural Resources Division’s Environmental Crimes Section; and from the U.S. Attorney’s Office for the Eastern District of Michigan, Criminal Division Chief Mark Chutkow and White Collar Crime Unit Chief John K. Neal and Assistant U.S. Attorney Timothy J. Wyse. The Justice Department’s Office of International Affairs also assisted in the case. The Justice Department also extends its thanks to the Office of the Public Prosecutor in Braunschweig, Germany. The Civil Resolutions: The first civil settlement resolves EPA’s remaining claims against six VW-related entities (including Volkswagen AG, Audi AG and Porsche AG) currently pending in the multidistrict litigation before U.S. District Judge Charles R. Breyer of the Northern District of California. EPA’s complaint alleges that VW violated the Clean Air Act by selling approximately 590,000 cars that the United States alleges are equipped with defeat devices and, during normal operation and use, emit pollution significantly in excess of EPA-compliant levels. VW has agreed to pay $1.45 billion to resolve EPA’s civil penalty claims, as well as the civil penalty claim of CBP described below. The consent decree resolving the Clean Air Act claims also resolves EPA’s remaining claim in the complaint for injunctive relief to prevent future violations by requiring VW to undertake a number of corporate governance reforms and perform in-use testing of its vehicles using a portable emissions measurement system of the same type used to catch VW’s cheating in the first place. Today’s settlement is in addition the historic $14.7 billion settlement that addressed the 2.0 liter cars on the road and associated environmental harm announced in June 2016, and $1 billion settlement that addressed the 3.0 liter cars on the road and associated environmental harm announced in December 2016, which together included nearly $3 billion for environmental mitigation projects. A second civil settlement resolves civil fraud claims asserted by U.S. Customs and Border Protection (CBP) against VW entities. VW entities violated criminal and civil customs laws by knowingly submitting to CBP material false statements and omitting material information, over multiple years, with the intent of deceiving or misleading CBP concerning the admissibility of vehicles into the United States. CBP enforces U.S. customs laws as well as numerous laws on behalf of other governmental agencies related to health, safety, and border security. At the time of importation, VW falsely represented to CBP that each of the nearly 590,000 imported vehicles complied with all applicable environmental laws, knowing those representations to be untrue. CBP’s relationship with the importing community is one based on trust, and this resolution demonstrates that CBP will not tolerate abrogation of importer responsibilities and schemes to defraud the revenue of the United States. The $1.45 billion paid under the EPA settlement also resolves CBP’s claims. In a third settlement, VW has agreed to pay $50 million in civil penalties for alleged violations of FIRREA. The Justice Department alleged that a VW entity supported the sales and leasing of certain VW vehicles, including the defeat-device vehicles, by offering competitive financing terms by purchasing from dealers certain automobile retail installment contracts (i.e. loans) and leases entered into by customers that purchased or leased certain VW vehicles, as well as dealer floorplan loans. These financing arrangements were primarily collateralized by the vehicles underlying the loan and lease transactions. The department alleged that certain of these loans, leases and floorplan financings were pooled together to create asset-backed securities and that federally insured financial institutions purchased certain notes in these securities. Today’s FIRREA resolution is part of the department’s ongoing efforts to deter wrongdoers from using the financial markets to facilitate their fraud and to ensure the stability of the nation’s financial system. Except where based on admissions by VW, the claims resolved by the civil agreements are allegations only. The civil settlements were handled by the Environmental and Natural Resources Division’s Environmental Enforcement Section, with assistance from the EPA; the Civil Division’s Commercial Litigation Branch; and CBP. View full article

This would have been my fourth Detroit Auto Show (or North American International Auto Show as some would like you to call it) for Cheers and Gears. But due to a leg injury sustained a couple of weeks before the show, I was unable to make it. Maybe that was a blessing in disguise as I would miss out on dealing with individuals who break out tape measures and clipboards to note every little detail, along with journalists complaining about why the show isn't held during a warmer month. But it would turn out this year’s show would be a bit disappointing. That isn't to say there were not any breakouts. The new Kia Stinger GT looks very intriguing as the new Lexus LS. I'm interested in checking out the new Toyota Camry (bet you weren't expecting that). Volkswagen's I.D. Buzz concept could bring something new in terms of electric vehicles (if it ever gets built). Plus Ford's announcement that the Bronco and Ranger were coming was some excellent news. But everything else landed with a bit of a thud. So how did we end up here? A lot of this comes down to the past few years at Detroit being very bountiful with vehicles that caused jaws to drop and excitement levels to rise. The likes of the Acura NSX, Buick Avista concept, Chevrolet Bolt, Ford GT, and Lexus LC made our souls stir and revel in this magical time. But sooner or later, the well was going to dry up and leave a show that was lacking in spark. At first, I thought it was part of a cycle. You have your high points before falling back down and then rising back up. But the more I thought about it, this might be a sign that the auto show is beginning to fade. The past few years have seen a number of automakers hold events off site before the kick-off of the show. Looking at the various social media feeds on Sunday, I was able to count seven different events. Holding something offsite give an automaker a way of controlling the message. It also gives a bit more time in the spotlight, not having to fight with other automakers for it during a packed press day. There are also more outlets for automakers to show their wares. The week before the Detroit Auto Show was the Consumer Electronics Show. The past few years have seen more and more automakers take part in regards to electric vehicles and autonomous driving. It has also been home for a small number of debuts; Volkswagen Budd-e, Chrysler Portal concept, and Faraday Future. The combination of these two, along with some manufacturers pulling out of Detroit over the past few years resulted in this year's show. Does this mean the Detroit Auto Show is doomed? Not at the moment. This year, organizers took a page from the LA Auto Show by doing more in terms of talking about the future of the automotive industry and mobility with press conferences and talks from various industry folks from Sunday to Tuesday. But the writing is beginning to appear on the wall. Down the road, it seems the auto show will not be the place where news is made. Instead, it will be the place where vehicles are gathered for all to look at. Before that day comes, we might get a couple more high points. View full article