VW struggling to agree fix for U.S. test cheating cars: source

Tue Jan 5, 2016 2:05pm EST
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By Andreas Cremer and Julia Edwards

BERLIN/WASHINGTON (Reuters) - Volkswagen is struggling to agree with U.S. authorities a fix for vehicles capable of cheating emissions tests, a VW source said on Tuesday, showing how relations between the two sides remain strained four months after the cheating came to light.

The source said the German carmaker would hold further talks with the Californian Air Resources Board this week and with the U.S. Environmental Protection Authority (EPA) next week, and still hoped to reach a solution by a mid-January deadline.

But finding a fix was proving more difficult than expected, in part because this involved producing new components which then required testing, said the person, who declined to be named as the talks are confidential.

The difficulties highlight the lack of progress VW has made in winning back the confidence of U.S. regulators and drivers almost four months after it admitted to cheating diesel emissions tests and promised to turn over a new leaf.

The U.S. Justice Department is suing Europe's biggest carmaker for up to $48 billion for allegedly violating environmental law - a reminder of the carmaker's problems nearly four months after its emissions scandal broke.

The move threw VW's U.S. problems back into focus after it seemed to be recovering ground in Europe, sending its shares down more than 8 percent to a six-week low on Tuesday.

"The announcement serves as a reminder/reality check of VW's still unresolved emissions issues," Goldman Sachs analysts said of the lawsuit.

VW Chief Executive Matthias Mueller is expected to meet EPA representatives and politicians in Washington next week after visiting the Detroit Auto Show, the VW source said, on what will be Mueller's first trip to the United States since the scandal broke in September.   Continued...

A Volkswagen company logo sits atop the VW factory in Wolfsburg, Germany November 20, 2015. REUTERS/Ina Fassbender