VW halts US sales of Audi, Porsche and VW 3-Litre diesels
Following on from yesterday's note, Volkswagen (VW) has ceased selling on 3-litre diesel Porsche, Audi and Volkswagen cars in the US, following allegations from the EPA that a "defeat device" was used in the vehicles in question, which were emitting up to nine times the federal standards for nitrogen oxides. VW denied the claim, stating that the new emissions control system in the 2016 versions are not a cheat. It is not known how long the vehicles will be off the market, however, as VW refuses to budge on its stance, it could take some time to resolve the impasse.

David Shepardson

Detroit News Washington Bureau

Washington — Volkswagen of America said Wednesday it has issued a stop-sale for Audi, Porsche and VW SUVs and high-end cars with 3-liter diesel engines that have been labeled by federal regulators as having pollution-control “defeat devices.”

The stop-sale order includes more vehicles than identified by the Environmental Protection Agency on Monday, which only labeled the specific model years of three vehicles it had tested as violating emissions rules by emitting up to nine times the legally allowable levels.

The new stop-sale covers certified pre-owned models of the diesel 2013 Audi Q7 and 2014 A6, A7, A8, Q5 and Q7; and new models of the diesel 2015-16 Audi A6, A7, A8, Q5 and Q7. The stop-sale doesn’t apply to the 2016 Q6, since there is no diesel version being sold in North America. A new one is slated to come out next year in the United States as a 2017 diesel Q6.

The stop-sale also covers certified pre-owned 2013-2014 diesel Touareg SUVs and new 2015-16 Touareg SUVs.

Porsche on Tuesday announced a similar stop-sale for diesel-powered 2014-16 Cayenne SUVs.

The hit to Audi may be less than to VW’s U.S. brand, which has said diesels account for about a quarter of its sales. Audi said diesels accounted for only 8.7 percent, or 15,818, of all vehicles sold in the U.S. last year.

Volkswagen AG initially had issued a statement denying the allegations, emphasizing “that no software has been installed in the 3.0-liter V-6 diesel power units to alter emissions characteristics in a forbidden manner.”

Audi spokesman Brad Stertz said the software at issue is not the same as in the 2-liter diesel cars. He said the stop-sale comes as the company tries to understand what the issue is: “Our engineers need to find out more information about EPA’s testing and the data “and how they came to their conclusions.”

Also Wednesday, VW said it was recalling 92,000 cars in the United States because of a problem with power-assisted brakes. The recall includes the 2015-16 Beetle, Golf, Jetta and Passat with 1.8- and 2-liter engines. VW must stop selling those cars until it has a fix. VW spokeswoman Jeannine Gininvan said the stop-sale for the brake recall includes 3,500 cars on dealer lots.

VW in Germany on Tuesday announced new problems with carbon dioxide emissions and mileage ratings on 800,000 vehicles, and said the costs of that issue could be $2.2 billion. VW stock fell 10 percent on the news Wednesday. It’s not clear if any of those vehicles are in the U.S., but U.S. VW officials don’t believe so.

Moody’s Investor Service downgraded VW.

“These new claims pose further challenges to Volkswagen’s financial flexibility and competitive position, and heighten Moody’s concerns about Volkswagen’s internal control and governance issues, thus further weakening its rating profile,” said Yasmina Serghini, a Moody’s Senior Credit Officer and lead analyst for Volkswagen. “These new developments pose additional risk to Volkswagen’s reputation, future sales and cash. They also suggest serious internal control and governance issues, which may be more widely spread than believed initially, that Volkswagen will have to address aggressively in the coming months.”

Government agencies have been testing samples of all diesel passenger vehicles on U.S. roads after VW’s admission in September that it illegally installed “defeat devices” in 11 million cars worldwide with 2-liter diesel engines that allow them to emit up to 40 times the allowable pollution. That includes 482,000 diesel cars sold in the U.S. since 2008.

The cars use sophisticated software to activate emission-reducing equipment during government testing. In real-world driving, it is deactivated.

Audi of America had said Monday it was not immediately halting the sale of its 2016 diesels. Porsche Cars North America originally said in a statement that it was “surprised” by the EPA announcement, and had believed the Cayenne was “fully compliant.”

Had Audi refused to halt sales, the EPA could have suspended the certificate needed to sell them. The EPA has not granted the certificate for suspect 2016 diesel VW cars.

The scandal that began in September has so far prompted the German automaker’s CEO to resign; caused it to set aside $7.3 billion to begin covering the massive costs; and led to criminal investigations around the world. Last week, the automaker reported its first quarterly loss in at least 15 years.

The Justice Department and federal prosecutors in Detroit are leading a criminal investigation into VW’s admitted cheating. The automaker faces more than 350 lawsuits around the country.

Six weeks after EPA initially disclosed the cheating, there is still not timetable for when VW will start recalling vehicles in the U.S. and fixing them.

DShepardson@detroitnews.com