Korea halts sales of most VW cars

The South Korean Environment Ministry said Tuesday that it has cancelled authentication for 32 types of Volkswagen vehicles as their test results were forged.

This affected 83,000 vehicles. Another 126,000 vehicles were decertified last November for emissions rigging, which means that a total of 209,000 vehicles will now be banned from sales. This accounts for 68 percent of the total number of VW vehicles sold here since 2007.

A penalty totaling 17.8 billion won ($16.1 million) is being charged to the German carmaker’s local unit for falsifying authentication documents on fuel efficiency and emissions for 24 models of VW vehicles, including the VW Golf and Audi A8. The extensive ban poses a serious threat to the overall operation of the carmaker in Korea.

The ministry explained that 26,000 vehicles across eight models were excluded from the penalty because the current Noise and Vibration Control Act does not impose a fine for cheating on a vehicle’s noise level.

In response, VW Korea released a statement through its website that said they regretted the “strictest possible penalty” and repeated their apologies to the customers. The company added it will take due follow-up measures, which industry watchers said might include legal steps challenging the government’s decision.

According to the revised Clean Air Conservation Act, which took effect on July 28, the company can be fined up to 100 billion won per vehicle model for cheating on test results to obtain authentication. However, the ministry said it decided to set the amount at 10 billion won per vehicle model, considering VW Korea voluntarily banned sales of disputed models from July 25.

If VW Korea reapplies for authentication -- which the ministry expects it to do in the near future -- the ministry said it would conduct thorough screening. It typically takes from two to three months to apply and receive authentication from the ministry. The Environment Ministry needs to approve the vehicle authentication within 14 days of application.

According to the ministry, Francisco Javier Garcia Sanz, one of the board members at Audi Volkswagen’s headquarters, visited the Environment Ministry last month and vowed to “fully cooperate with the ministry decision and speed up the recall process of emissions-rigged vehicles from last year.”

The ministry added that an additional support plan for customers who purchased the disputed models is currently under review, while there will not be any disadvantages for drivers of VW vehicles.

Meanwhile, the court on Tuesday dropped the prosecutors’ request to arrest former VW Korea CEO Park Dong-hoon, who is suspected of being involved in the emissions rigging scandal, citing the need to guarantee his right to defense based on the current progress of the investigation. Park is currently the chief of Renault Samsung Motors.

By Kim Da-sol (ddd@heraldcorp.com)