By Park Jin-hai
The local car industry is feeling the fallout from the global Volkswagen emission scandal as the government introduces successive measures to widen the investigation and penalize all polluting diesel makers.
The environment ministry last week confirmed Volkswagen’s cheating and ordered a recall, slapping a total fine of 14.1 billion won for its 15 models, the largest yet.
Now the investigation has been widened to include all diesel models sold here. Included are models of 16 carmakers including Porsche, Jaguar, Hyundai Motor and Kia Motors.
The government is also close to raising the cap for the polluting carmakers tenfold to 10 billion won.
Moreover, the land ministry, which watches over fuel efficiency and safety, said it would investigate how the so-called defeat device could affect fuel efficiency.
The ministry plans to conclude its investigation by mid-December and take punitive and administrative measures against companies whose vehicles’ fuel efficiency exceeds by more than five percent the figure that has been claimed.
Experts said that such unprecedented government measures aimed to avoid accusations that the government was lenient on automakers, and to show it was prepared to take strong measures on environmental issues.
“The 14.1 million won fine was all the ministry could do this time,” said Kim Pil-soo, an automotive engineering professor at Daelim University.
“As the government is on the same page as for the lifting the penalty cap, it is only a matter of time before it becomes law.”
Lee Hang-koo, a researcher at the Korea Institute for Industrial Economics and Trade, said that although the clamor was loud, it would not be long-lived as happened with Toyota, because of political reasons.
“Some raise the possibility that this targets the imported car industry, but, I don’t think so,” he said. “Hyundai, which might have gained a little from the Volkswagen scandal, might also face the repercussions as well.
“The nation’s largest carmaker has also invested a handsome amount of money in developing its own diesel engines.
“Due to the tough environment standards, its luxury Genesis sales could be hit hard, as they could lose price competitiveness in the global market.”
Given the bilateral relationship between Korea and Germany, whereby German cars make nearly 70 percent of all imported cars here, and Hyundai is the biggest imported car in Germany, the recent government measures following Volkswagen scandal will be pushed so far as not to stand in the way of the Korea-Germany relationship, he said.
“It is certain that the Volkswagen scandal is having a negative impact on the local car industry as a whole. To comply with the strengthened environment standards, it is inevitable to switch to Selective Catalytic Reduction system, which is estimated to raise the total car price nearly 10 percent. To make the bulky system smaller, to mount on smaller vehicles, it will accrue additional costs as well,” said a Hyundai Motor official.