Volkswagen to pay up in U.S., but not yet locally

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Volkswagen to pay up in U.S., but not yet locally

Volkswagen agreed to pay up to $15 billion in the United States in compensation for the diesel emissions cheating scandal Tuesday, the largest-ever payout in the automotive industry.

In Korea, however, it still refuses to pay.

Approximately nine months after Volkswagen admitted to making its vehicles’ software cheat - by reducing the amount of emissions from its cars during tests - U.S. regulators and the German automaker came to an agreement Tuesday local time to partially settle the issue.

Some of the estimated $15 billion will go to Volkswagen vehicle owners, who will get to choose between getting their cars fixed or selling them back to the automaker.

Some will go to the U.S. Environmental Protection Agency to compensate for damage done to the country’s atmosphere. Volkswagen will also have to participate in projects that encourage U.S. drivers to use zero-emissions vehicles to offset their effect on the environment in the past.

However, the settlement in the United States has not affected how the local unit of the German carmaker is handling Korean customers.

On Wednesday, Audi Volkswagen Korea issued a press release that said under current Korean law, Volkswagen is guilt-free.

It reiterated that it hasn’t violated any provision related to the so-called defeat device, the software used to rig emissions levels, because the Korean law that regulates vehicles’ defeat devices was implemented in 2012.

The company said that its models equipped with the problematic EA189 engine were released in Korea between 2007 and 2011.

The announcement on Wednesday came after Volkswagen’s recall plan was rejected three times by the Korean Ministry of Environment because it did not admit to using the defeat device in vehicles sold to Korean drivers and didn’t describe how it would compensate its Korean customers.

Different regulations imposed by Korean and U.S. regulators allow Volkswagen to react differently in Korea, according to the press release.

It said the United States has much stricter levels of allowed emissions, at 0.031 grams per kilometer (0.05 grams per mile) versus 0.18 grams per kilometer in Korea. The company said vehicles released in the U.S. are equipped with more complex software, and the whole system needs to be replaced, while in Korea-released vehicles, only upgrades to the software and minute fixes in the hardware are needed.

“We feel sorry that we have lost Audi Volkswagen Korea’s customer confidence due to the recent incident,” the press release said. Meanwhile, Seoul prosecutors summoned Park Dong-hoon on Wednesday, the first CEO of Audi Volkswagen Korea, to question him on the matter.


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