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San Francisco - Volkswagen suffered a setback in its efforts to emerge from the 10-month-old emissions-cheating scandal as California regulators rejected a recall proposal for 85 000 diesel-powered vehicles, raising the prospect that the German car maker will have to buy them all back.
The manufacturer’s plan for fixing Volkswagen, Audi and Porsche models equipped with 3.0-liter engines rigged to cheat on emissions tests was inadequate, the California Air Resources Board said Wednesday in a statement.
The regulator, along with the US Environmental Protection Agency, will continue talks with Volkswagen in hopes of finding a fix, CARB said in letters dated Wednesday to Volkswagen executives and attorneys.
The agency has been in talks with the German company over the 3.0-liter engines since at least February 2, when the manufacturer filed its first "single, incomplete recall plan," according to the letters.
Additional data submitted by Volkswagen as recently as June is also "incomplete" and "substantially deficient" for legal requirements, CARB said.
The rejection shows the scandal that emerged in September is far from over, despite a landmark $14.7bn settlement reached last month. That agreement, covering 480 000 cars with 2.0-liter engines, will require Volkswagen to devote as much as $10bn to buy back the cars.
A federal judge in San Francisco is considering whether to approve the accord, which would also allow owners to have their cars repaired if a fix is approved by federal and state regulators.
"It seems that a buyback is a definite possibility if there’s not a solution that makes them street legal," Kelley Blue Book senior analyst Rebecca Lindland said in an e-mailed statement.
"A buyback, while solving the problem for CARB, doesn’t solve the problem for consumers who may not want to give back their vehicle."
The German company reached a related $603m settlement in June with 44 US states to resolve consumer and environmental claims.
Volkswagen rose as much as 2.3% to €117.50 and was trading up 2.1% as of 9:13 a.m. in Frankfurt. That pared the stock’s decline this year to 12%, valuing the car maker at €61.8bn.
