After much attention in the United States and Europe, German carmaker Volkswagen’s presence in China is subject to much attention due to their diesel cars adjusted emission tests. Volkswagen started everything by admitting that it was using a device that gave a lower reading for toxic nitrogen oxides emissions when its diesel cars were undergoing tests. Logically, China as the world’s largest car market is the next in sequence of investigative actions and precautions taken by state regulators.

Although (and as well as in the United States) most of the vehicles sold in China run on petrol and the amount of diesel Volkswagen cars sold in China is relatively insignificant, analysts speculate that the scandal could cause a severe damage to the brand perception (regardless of the engine).

Chinese Quality Standards Authority (The General Administration of Quality, Supervision and Inspection; AQSIQ) announced that it would recall 1,950 imported Volkswagen cars in China and that these would predominantly be Tiguan SUVs proven to have the misleading emissions software installed. In China, Volkswagen manufactures their vehicles through joint ventures with SAIC and FAW (two state-owned vehicle companies), which claim that the software that’s able to adjust the car’s emissions tests does not affect their domestically produced cars.

Regardless of the seemingly negligent overall global impact of the scandal, it certainly is not a laughing matter for regulators and environmental ministers anywhere. The concerning fact is that is was possible to put such a mechanism was in place despite all of the stringent procedures the manufacturers and their suppliers undergo.

So far, Volkswagen is the main actor in this drama, but there are hints of other carmakers using the very same technologies for the same ends and thus it is foreseeable that the scandal will have comprehensive implications for the whole industry. In the coming months, even if the Chinese customers stay faithful to Volkswagen and other foreign carmakers, the domestic regulators will have to force the carmakers spend more on testing, certifications and quality control instead of investing into new production facilities or technologies.

Sources:

«Big investors demand carmaker answers on emissions lobbying» Financial Times. http://www.annexasia.com/

«VW scandal: China watchdog ‘concerned’ about diesel defeat device» The Guardian. http://www.annexasia.com/

«Volkswagen recalls Chinese cars» The BBC. http://www.bbc.com/news/business-34503141

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