Volkswagen is launching one of the biggest vehicle recall orders in the history of the European automobile industry, affecting about 8.5 million diesel-powered vehicles, as German authorities rejected the proposal of the car manufacturer for voluntary repairs.
The Federal Motor Transport Authority demanded Volkswagen to recall 2.4 million vehicles in Germany after going through Volkswagen's proposals on fixing the vehicles that were outfitted with software that was designed to cheat emissions testing. The mandatory recall that was made after the rejection of Volkswagen's proposal served as the basis for the recall orders throughout the region, where diesel cars take up over half of the automobile market.
"It's an unusual measure to be ordering a mandatory recall," said Evercore ISI analyst Arndt Ellinghorst, adding that the Federal Motor Transport Authority could be losing patience with the slow response so far of Volkswagen on how to repair the affected vehicles.
The 8.5 million vehicles involved in the recall order are a little less than one-third of the automobile deliveries made by Volkswagen in Europe from 2009 to August. The recall order is also the biggest in Germany since the current laws were implemented in 1997, and more than four times compared to the 1.9 million vehicles that the automobile industry recalled for repairs last year.
The mandatory recall will turn out to be more expensive for the company, as the work to be done on the vehicles will have to be done quicker. Volkswagen has not yet revealed what it will exactly do to fix the vehicles, though it previously said that some cars will only need an update to its software and others will need new or rebuilt parts for the engines.
Regulators in the United States, meanwhile, are still waiting for a detailed proposal before ordering the car manufacturer to issue a recall order for affected vehicles in the country. Volkswagen said that a more extensive solution would be required to fix the almost half million affected vehicles in the United States due to the tougher nitrogen oxide emission standards compared to that of the European Union.
The Environmental Protection Agency said that it will conduct its own tests to confirm if the proposal of Volkswagen will turn out to be effective before issuing the recall order.
