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Volkswagen U.S. CEO: It may take years to fix cars

Executive tells Congress automaker will accept 'full responsibility' for emissions cheating scandal

Nathan Bomey
USA TODAY

WASHINGTON — Testifying in a packed hearing room, Volkswagen's U.S. CEO apologized before a congressional subcommittee Thursday for his company's decision to surreptiously rig diesel cars to beat emissions tests and acknowledged that it's "hard to believe" top VW officials didn't know about the scam.

Michael Horn, straining at times to hear questions over the patter of camera shutters, told the House Oversight Subcommittee that blame likely centers on "rogue" German software engineers, even though the fallout is sure to cost the automaker billions of dollars in repairs costs, fines and lawsuit settlements. Yet Horn, who says he first learned of the diesel noncompliance issues in 2014 but not about the cheating, kept his cool and replied reassuringly to members' pointed questions.

Speaking in a thick German accent, Horn  became the first Volkswagen executive to publicly testify under oath about the company's admission that it inserted software into 11 million diesel cars around the world designed to fool regulators into believing the cars were compliant with emissions standards. Horn said for the first time that the automaker would fix the 482,000 U.S. diesel cars involved in the scandal, not buy them back from consumers, though he indicated the company is weighing compensating owners for lost value.

Horn, who has not been implicated in the scandal, pledged to repair cars through a combination of hardware and software changes and said three employees in Germany, who he did not name, have been suspended. He said he believes the company's American employees did not know about the matter until recently.

He emphasized that the company's internal investigation is ongoing — and that it's yet unknown how far knowledge of the episode went up the corporate ladder — but he suggested that the motivation may have been an effort to meet cost goals.

If so, that's not an excuse, Horn said, calling the entire episode "deeply troubling."

"I think it's dead wrong if you put corporate profits before people," he said.

Several members of Congress urged the company to buy back those cars.

Rep. Chris Collins, R-N.Y., rejected Horn's suggestion that the problem can be blamed on rogue engineers. “It’s a sign of arrogance," Collins said. "It’s a sign of not admitting yet the severity of your problems."

U.S. Rep. Fred Upton, R-Mich., chairman of the overall committee, said Volkswagen must "pay a steep price" for a culture of "cheating and betrayal."

The cheating has exposed the German automaker to Environmental Protection Agency fines of up to $18 billion, a U.S. Justice Department criminal probe, consumer lawsuits and investigations in Europe. The cars are emitting harmful pollutants at rates of up to 40 times acceptable U.S. standards.

Kelley Blue Book calculated that buying back all the U.S. diesel vehicles embroiled in the scandal would cost the company about $7 billion. In contrast, KBB's sales data show that the average values of the 2009 to 2015 diesel models have fallen by 13% since the scandal erupted, an average of nearly $1,700 in value per vehicle.

Horn could not give a timeline for repairs. The oldest models, dating back to 2009, will require significant hardware changes because they do not have sufficient physical space for the equipment that is required. The company is still developing a proposed fix for those cars, but it could take years to repair them all due to the complex hardware and software changes that will be required, he said.

Fixes for the rest of the vehicles involved in the scandal could start as soon as early next year, Horn said.

VW backs off on diesels in U.S. for 2016

Horn said that the company would accept "full responsibility" for fitting software on diesel cars that fooled regulators into believing the vehicles were compliant with emissions regulations.

Several members of the committee said the violations reflect a broader problem with the auto industry in the wake of scandals at Toyota, General Motors, Fiat Chrysler and supplier Takata.

"The American public are not crash-test dummies and should not be treated as such," U.S. Rep. Frank Pallone, D-N.J., said, adding that he believes there's a "pervasive culture of corruption" in the auto industry.

Horn expressed remorse but pushed back against accusations about a backward culture, saying they do "not reflect the company that I know."

In additional testimony, EPA official Christopher Grundler said the agency is pressing forward with previously announced plans to begin conducting random road tests of new and used vehicles to verify emissions compliance.

"We've learned from this episode for sure," said Grundler, director of EPA's Office of Transportation and Air Quality. "We wish we had found it sooner."

Fixes to the vehicles involved in the scandal will likely preserve fuel economy ratings but "there might be a slight impact on performance," Horn said.

The automaker is temporarily banned from selling diesel cars fitted with the manipulative software until it can deliver a fix. On Wednesday, the company confirmed that it will not sell many 2016 diesel models in the U.S.

Volkswagen is now subsidizing U.S. dealers to help them navigate the crisis, Horn said, calling dealer profitability his top priority.

VW CEO: Recall of scandal-hit cars should start in January

Horn, who has been in his current job since early 2014, is known within the auto industry for his candor and his popularity among dealers. He told the committee that he learned about a "possible emissions non-compliance" issue in spring 2014, but that it was under control and engineers were working on a solution. But he said he did not know about the manipulative software until Sept. 3, about two weeks before the EPA disclosed the matter.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.

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