Environment officials slow, soft on VW, critics say

Korea’s Ministry of Environment banned the sales of 80 car models produced by Audi Volkswagen Korea earlier this week, prompting the automaker to call it the “strictest sanction,” but market insiders say that the ministry acted too slow and was too lenient in handling the carmaker’s emission deception.

In Korea, 68 percent of all Audi Volkswagen cars, or 209,000 cars sold since 2007 are subject to a sales ban and decertification. Although the carmaker was found guilty of test fixing and emissions cheating, critics blame the Environment Ministry for not catching the fraud sooner.

“We admit there are limits to what we can actually find out during the document screening process for certification,” said Hong Dong-gon, head of the traffic environment division at the ministry. “And since we are not granted investigation power, unlike the prosecution, it is hard to spot each test-fixing case.”

Hong added that the ministry is seeking ways to scrutinize emissions documents and better screen performance results on imported cars.

Some analysts have said the ministry’s move is a de facto closing of Audi Volkswagen in Korea. But critics say the ministry’s punishments on VW, following its investigation, have been lenient.

The ministry fined the automaker 17.8 billion won ($16 million) as a result of the scandal but under the recently amended Clean Air Conversation Act, it could have imposed a fine of up to 10 billion won per car, or a total of 68 billion won. The act was amended last Thursday to raise the ceiling on fines from 1 billion per car but the ministry said “[Volkswagen] suspended sales of the models under question before the amendment took effect” and used the earlier ceiling, limiting the fine.

The German automaker banned sales of problematic models on July 25, just three days before the Clean Air act was amended.

“It seems to be a trick played by the automaker to ban sales just three days before the law took effect,” said Ha Jong-sun, an attorney at law firm Barun, which is handling class-action lawsuits against Volkswagen. “The ministry had discretionary authority to impose fines on the automaker based on the newly revised law but it didn’t.”

The fines or recent progress of the case, however, have done little to help local consumers’ sentiments toward the German automaker. Falling resale prices on the used-car market and limited repair services add to growing discontent among consumers.

According to SK Encar, a used-car sales platform, the average price of a used Volkswagen has dropped 11.9 percent since October, a month after the emissions-rigging scandal broke. Prices are expected to continue to decline, analysts say.

The automaker is unsure of how to proceed in Korea.

“We are considering various options such as filing for a suspension of execution and resuming sales of the models under question but nothing has been confirmed internally yet,” a spokesperson from Volkswagen Korea said.

BY KIM JEE-HEE [kim.jeehee@joongang.co.kr]