VW’s U.S. Chief Apologizes at Congressional Hearing

WASHINGTON — The president of Volkswagen's American unit came under withering criticism on Thursday at a congressional hearing looking into the automaker's admission that for years it knowingly skirted federal emissions standards.

Michael Horn, the automaker's top official in the United States, repeatedly expressed remorse over the company's deception, but lawmakers were looking for more than an apology for its use of a so-called defeat device that fooled regulators during emissions testing.

"You haven't revealed how the defeat device affects the engine, why it was installed and how it was able to evade emissions tests," said Diana DeGette of Colorado, the top Democrat on the subcommittee. "You haven't revealed when and how the engines equipped with this defeat device will be fixed. And you haven't told us whether that fix will affect the fuel economy or performance of the vehicles."

Volkswagen U.S. Chief Knew of Potential Emissions Problems in 2014OCT. 7, 2015

She added that Volkswagen had not disclosed what it told regulators over the last year as the Environmental Protection Agency and California regulators pressed it for answers, whether the voluntary recall set in motion in 2014 was a ruse, and, finally, who is responsible for the scheme.

Volkswagen could have saved fuel or improved performance by allowing more pollutants to pass through its cars' exhaust systems, researchers said.

"We don't know who knew about it in Germany and who knew about it in the United States," she said.

More than 11 million cars worldwide, including about 480,000 in the United States, were outfitted with engine software designed to fool testers into thinking that certain diesel vehicles met pollution standards, also known as a defeat device.

"I did not think that something like this was possible at the Volkswagen Group," Mr. Horn said. "We have broken the trust of our customers, dealerships and employees, as well as the public and regulators." Volkswagen, he said, took responsibility for its actions and will work with investigators.

But lawmakers were not mollified.

"V.W. will inevitably pay a steep price for its dirty little secret," said Representative Fred Upton, a Republican from Michigan, who is chairman of the full committee on Energy and Commerce. "We will get some additional insight today, but the committee's investigation is just beginning."

He expressed doubt that this was Volkswagen's only secret. "If they were willing to cut corners here, what else have they done?" he asked.

Representative Frank Pallone, a Democrat of New Jersey, asked whether the American people should trust the auto industry at all, lamenting recent automotive safety scandals involving General Motors' faulty ignition switches, Takata's exploding airbags and Toyota's problems with unintended acceleration.

"There seems to be a pervasive culture of deception in this industry, and it has to stop now," he said.

Volkswagen has admitted that it programmed the cars to sense when emissions were being tested and to switch on equipment to reduce them. But during normal driving conditions, when the vehicles had better performance, they produced as much as 40 times the acceptable amount of a pollutant, nitrogen oxide, which can contribute to respiratory problems.

The hearing was held on the same day that German investigators searched Volkswagen's Wolfsburg headquarters and elsewhere. State prosecutors in Braunschweig said in a statement that they were looking for documents and data storage that would give them clues as to who might have been responsible for the decision to install the software that led to the emissions cheating.

Acting on complaints filed by several citizens, as well as officials at Volkswagen, prosecutors have begun a preliminary investigation against employees, who have not been identified, on suspicion of fraud.

Volkswagen said in a statement that it had "handed over a complete collection of documents pertaining to authorities' investigation." A complaint by the company itself was one of several filed to prosecutors in Braunschweig in connection with the emissions scandal, and Volkswagen has pledged to support the investigation by German authorities.

At the hearing, Mr. Horn was pressed on how Volkswagen planned to fix the cars, but he did not commit to replacing them.

"Our plan is not to buy back the inventory," Mr. Horn said. "Our plan is to fix the cars."

But, he added, it could take years to fix the affected vehicles in the United States. There were three groups of vehicles involved, Mr. Horn said, each containing one of the three generations of the 2-liter diesel engine. Each will require a different remedy. The most recent cars, in the 2015-16 model years, can be fixed starting next year, he said, but he offered no timetable for the first generation, which accounts for the vast majority of the faulty cars.

The big questions from lawmakers focused on who had conceived the idea for the defeat device and put it in place, and how far back the plan stretched. Volkswagen's new chief executive, Matthias Müller, said this week that only a few employees at the company had been aware of the emissions cheating.

For his part, Mr. Horn said he was told that "there was a possible emissions noncompliance" in spring 2014, earlier than previously acknowledged by top management in the United States, but he added that he had been informed that the company's engineers would work with the E.P.A. to resolve the issue. Later that year, he said, he was told that Volkswagen's technical teams had a specific plan for remedies to bring the vehicles into compliance.

Mr. Horn said he learned of the defeat device a couple of days before a Sept. 3 meeting during which regulators were informed of the cheating.

When pressed over statements that senior executives in Germany did not know of the scheme, he shared in the skepticism. "I agree it is very hard to believe," he said.

Mr. Horn also deflected demands by the panel for more information. He repeatedly reminded lawmakers that, as the chief of Volkswagen's American unit, he could not make promises for Volkswagen headquarters to turn over documents. He noted that there were "quite a number of people above me."

Volkswagen has been asked to turn over documents to the committee by Tuesday.

Two officials from the E.P.A. will also face questions on Thursday, separately from Mr. Horn. In the United States, automakers conduct their own emissions tests and submit the results to the government. On Sept. 25, the E.P.A. sent a letter to all auto manufacturers, notifying them that it would strengthen its testing activities in response to the Volkswagen scandal.

"We take seriously our responsibility to oversee the implementation and enforcement of our clean air regulations," said Christopher Grundler, director of the Office of Transportation and Air Quality at the E.P.A., and Phillip Brooks, a director at the agency's Office of Enforcement and Compliance Assurance, in joint written testimony provided to Congress before the hearing. Both men are scheduled to testify.

They continued, "It is this oversight that ensures the benefits of clear air emissions standards are realized, that the industry is competing on a level playing field, and that consumers are getting what they pay for."

Volkswagen is facing scrutiny beyond Thursday's hearing. Mr. Grundler and Mr. Brooks said in the testimony that the E.P.A. would be working closely with the Justice Department, which has opened an investigation into the company's deception that could result in criminal or civil charges, or both.

And this week, the two top senators on the Senate Finance Committee sent a letter to Volkswagen officials asking for information about subsidies the company might have received after telling the Internal Revenue Service that its diesel vehicles qualified for tax credits for fuel-efficient cars. The senators, Orrin G. Hatch, Republican of Utah, and Ron Wyden, Democrat of Oregon, gave the company an Oct. 30 deadline to answer questions and provide documents.

Attorneys general from at least 40 states and the District of Columbia are starting a bipartisan coalition to investigate possible consumer fraud and environmental violations by Volkswagen, according to people familiar with the inquiry who spoke on condition of anonymity because of the ongoing investigation. Additionally, attorneys general in California and Texas are pursuing their own investigations. Criminal investigations have also begun in Europe.