Germany's big three car companies – VW, Daimler and BMW – have agreed to an EU-wide software update on millions of diesel cars to reduce harmful emissions, but have ruled out expensive hardware retrofits as "impossible".
After auto executives met German politicians in Berlin on Wednesday, environmental groups vowed to press ahead with their campaign to ban diesels from German cities on air quality grounds, dismissing the software update proposal as a "Mickey Mouse solution".
Executives from VW, Daimler and BMW said they were offering a “voluntary” software update for Euro 5 and Euro 6 standard engines and would absorb the related costs of €250 million.
VW has agreed to update software on 1.3 million cars, in addition to 2.5 million it has been ordered to recall; Daimler will carry out 900,000 vehicle software updates and BMW 300,000. The software updates will require on-road tests before and after software updates to confirm efficacy.
The companies also agreed to finance incentives for customers who replace older diesels with newer, cleaner models. BMW said it would offer up to €2,000 for customers with cars fitted with Euro 3 and 4 standard engines across Europe, VW will announce its own incentive programme shortly.
German environment minister Barbra Hendricks admitted software updates were a "first step" that would "not entirely solve problems" of air pollution. The meeting did little to ally fears of looming diesel bans in German cities in the coming months, carrying over motorist anger and insecurity spilling into September's federal election.
“People have a right to clean air and several court rulings make clear how urgently we need to act,” said Ms Hendricks, of the Social Democratic Party (SPD). She welcomed news that car companies – and not the state – would finance subsidies for new vehicles.
“Whoever says yes to the market economy cannot call for the state in the case of company failure,” she said.
Her fellow Social Democrat (SPD) Stephan Weil, state premier of VW's home of Lower Saxony, said the discussion over hardware retrofits – seen as more effective, if risky, than software updates – was "not over yet".
But VW chief executive Matthias Müller contradicted him.
“We consider it impossible to carry out retrofits because of the effort and the questionable effect,” he said. “I would like to let my engineers work towards the future and not work on engines that are 10 or 15 years old.”
The VW boss bristled at a claim from Ms Hendricks that Germany’s auto crisis had been caused by “company failure”, while Daimler and BMW chief executives offered more contrite words.
BMW chief Harald Krüger insisted his company did not manipulate emissions but, in a nod to an EU cartel investigation, acknowledged the seriousness of the situation.
Daimler boss Dieter Zetschke conceded "trust has been lost" – without saying by whom.
“I understand many people think the auto industry is the problem, it is our task to show that we are part of the solution,” he said.
The Daimler boss said the one-hour software update would have “no effect on the certified fuel use or (engine) performance”. Car companies would “naturally” cover the cost of any damage to parts during the update.
German environmental lobby group DUH dismissed the summit outcome as “another car industry con” and vowed to carry on with its legal action to ban diesel cars in 16 German cities from next year.
"This Mickey Mouse software solution will bring nothing: the courts say so," said Jürgen Resch, DUH chief executive in a nod to a Stuttgart ruling last week.
Germany’s automobile club (ADAC) says software updates can reduce nitrogen dioxide (NOx) levels by up to 30 per cent – but agrees this is too little to bring levels of the noxious gas to legal limits in many German cities.
Hours before the conference in Berlin’s federal transport ministry Greenpeace activists unfurled a banner on the building: “Welcome to Fort NOx.”
Citing “security concerns”, the meeting was shifted at short notice from the transport ministry to the adjacent interior ministry.
In a sober press conference, German politicians urged foreign manufacturers of about 800,000 problematic diesel cars on the country’s roads to offer software updates.
In addition to software updates, Berlin announced plans to double – to €250 million – federal investment in cleaner public transport at local level and additional measures to improve digital. Car companies said they would contribute based on market share, but named no figures.
Opposition politicians accused Germany’s government of caving in once more to Germany’s powerful car industry, that employs 800,000 people directly and contributes over a fifth of the country’s prosperity.
“This all risks turning to rubble unless the government delivers results,” said Cem Özdemir, Green Party co-leader.
Two years of scandal, and growing insecurity about the future of the diesel engine, has seen diesel registrations drop by almost 13 per cent year on year, according to new official data, while petrol car registrations have jumped 11 per cent.
The verdict on Wednesday's high profile summit was swift, with Germany's Süddeutsche Zeitung daily describing it as a "success for the auto industry".