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Volkswagen boss predicts return of diesel

Volkswagen CEO Matthias Mueller speaks at the annual earnings news conference of VW in Berlin in Berlin, Germany, March 13, 2018. REUTERS/Hannibal Hanschke

Volkswagen boss Matthias Mueller said Tuesday he's convinced that there will be a comeback for diesel motors more than two years after his firm admitted to cheating on US emissions tests, a move that sparked a huge backlash against diesel.

"I am convinced that diesel is experiencing a renaissance," Mueller told an audience at the German company's annual news conference in Berlin Tuesday.

This upbeat view contradicts the bleak drop in sales of diesel cars across Europe, triggered by Volkswagen's emissions scandal in 2015.

'Dieselgate' as it's been dubbed, meant that 11 million of Volkswagen's cars were fitted with “defeat devices”, allowing them to beat pollution tests.

The fallout cost the German maker more than 3 billion euros last year. Coupled with that, is the recent ban on diesel cars in cities in Germany, honing fears that driving bans could deal a further blow to the car sector. A far different picture from Mueller's so-called renaissance.

But that would be ignoring VW's record sales. The company sold 10.7 million vehicles in 2017, up by 4.3%, meaning that it is still the number one carmaker in the world.

"It's surprising that they are able to get those results with so much pressure, and so big losses on correcting vehicles and so forth," Berry Van Gestel, the former chairman of Cadillac and Corvette in France, told RFI.

It shows that "they have so much margin on the production that they do, that they can bear all those extra costs," he said.

After Dieselgate

The German car giant was ordered to recall cars fitted with defeat devices to make them comply with regulations and fork out billions of euros in fines and vehicle refits.

Yet even with the improvements, VW cars are still failing pollution tests, according to the Australian Automobile Association. It found that vehicles fixed after the Dieselgate scandal are using more fuel than they did before.

Volkswagen has rejected the claims. CEO Mueller insisted Tuesday that 4 million cars had been fitted with update software to reduce emississions, and added the company would be "part of the solution" in finding a way to address controversy over the "diesel issue", as the group labels it.

"We don't have trust in those kind of measures," Dorothee Saar, head of the transport and air quality team at the Environmental Action Germany (DUH) told RFI.

"We ask for really effective hardware retrofit [technologies] that have proven to reduce NOX emissions," she said.

Volkswagen, like many other carmakers, uses diesel engines. They have the benefit of being important power systems for on-road and off-road vehicles, but the downside is they emit significant amounts of nitrogen oxide (NOX).

Germany's Environment Agency says that last year, nitrogen dioxide emissions were responsible for 6,000 premature deaths.

Diesel ban under fire

New retrofit technologies have been developed to reduce harmful emissions, but environmentalists are pressing for bans on older diesels in German cities with high pollution levels.

Major cities such as Stuttgart, Dusseldorf and Hamburg are all contemplating bans, with the latter implementing limits by the end of April.

However, not everyone is happy.

This ban is an "ideological fight," Fabio Reinhardt, a member of the right wing AFD party told RFI.

"All of these city councils, they're basically ruled by green-red coalitions. They're using the diesel issue to have a fight against cars in general which I don't like," he said.

Rather than making car owners pay, environmentalists are calling for exemptions that would allow consumers with Euro-5 and Euro-6 cars that meet regulations "to still enter the cities even if a diesel ban is installed," says Saar.

Future of VW

For his part, Van Gestel, who's worked with a wide range of vehicles his entire life, also dismisses the idea of a diesel ban.

"If you have a truck and you have to go heavy loads, then the best way to do it is with a diesel. But a diesel with a proper engine."

The former chairman of Cadillac and Corvette France has urged for better testing of vehicles to keep emissions under control and avoid further cheating.

The Volkswagen scandal has nonetheless boosted investment in electric vehicles, with CEO Mueller vowing to pour 34 billion euros by 2022 on autonomous and electric technology.

"What everybody still forgets is that the solution with electrical vehicles is not without any pollution either," adds Van Gestel.

"We still do not have a solution to recyle the batteries," he explains, nor do "we have enough lithium to make all those batteries," he said.

Elsewhere, planned US tariffs on steel and aluminium has further cast a cloud over the German carmaker.

Volkswagen "takes very seriously" protectionist threats from US President Donald Trump, VW Finance chief Frank Witter told journalists Tuesday, but insisted that it would only have a "negligible" effect.