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Volkswagen Pulls Out Of U.S. Diesel Market

Volkswagen's days of selling diesel cars in the U.S. are over, the company's CEO says.

The decision to end diesel sales stateside comes after the company battled through an emissions cheating scandal, eventually doling out $14.7 billion in a settlement with 475,000 Volkswagen owners in the U.S.

But it's also reflective of a shrinking market for diesel cars and increasingly stringent regulations, a Volkswagen executive said.

At November's Los Angeles Auto Show, Volkswagen Group of America CEO Hinrich Woebcken told Reuters he doesn't believe the diesel market would "come back in the same magnitude as we've seen it up to now." Instead of trying to develop diesel cars to meet moving goalposts in emissions, executives say the company will focus on the electric car market and offering more SUV models.

"Emissions standards in following years are getting tougher and tougher," Woebcken said. "Why don't you put the money and investments ... to comply with these standards, why don't you put the money on the spot where the future is?"

On Nov. 22, Volkswagen brand Chief Executive Herbert Diess made it official, Reuters reported, confirming the company's shift away from diesel.

The decision to drop diesel is also an attempt at salvaging the company's brand after its 2015 emissions scandal, according to Fortune.

Diesel cars once comprised 25 percent of the German automaker's sales, and the company made a greater effort to push into the American market with advertising that claimed Volkswagen's diesel engines had lower emissions than standard cars, the BBC noted.

But there was a problem with that claim -- millions of the company's diesel cars were fitted with a "defeat device," a software mechanism that was able to detect when the car was in emissions testing mode through monitoring things like speed, air pressure and whether or not the steering column was moved.

Volkswagen eventually admitted that as many as 11 million of its cars worldwide were fitted with the emissions-cheating software, which hid the fact that some models emitted 40 times the nitrogen oxide pollutants as allowed by U.S. standards. The company's global chief executive was fired and replaced by Matthias Mueller, who previously served as head of Porsche.

"My most urgent task is to win back trust for the Volkswagen Group - by leaving no stone unturned," Mueller said in late 2015 shortly after assuming the top post.

With the massive legal settlement and recall, Volkswagen had apparently survived the scandal when regulators in California discovered that engines in Audi vehicles -- which are also owned and manufactured by the German company -- were also fitted with emissions cheating devices.

The newly-discovered cheating software tried to mask emissions in both diesel and gasoline-powered Audi models, according to the Wall Street Journal. The California Air Resources Board (CARB) discovered the devices based on knowledge gleaned from the earlier round of emissions-cheating cars.

By fooling the Audi models into believing the cars were on the road -- and not in a testing environment -- CARB technicians found a dramatic spike in CO2 emissions from the vehicles, the Journal reported.

Fallout from the presence of cheat devices in Audis is ongoing, and it's not clear if the company will face additional lawsuits and investigations from U.S. regulators.

Sources: Reuters, Fortune, BBC, Wall Street Journal / Photo credit: Wikimedia Commons

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