South Korea joined the United States Thursday in punishing Volkswagen for lying about its vehicles' emissions, making it the second country to hit the automaker with sanctions. South Korea ordered Volkswagen Korea to pay 14.1 billion won, which is equivalent to about $12.31 million. It also ordered the recall of 125,522 vehicles for emissions violations, which South Korea confirmed with its own tests.
South Korea's Biggest Fine Ever Against an Automaker
South Korea's environment ministry said that its own testing of vehicles revealed that Volkswagen manipulated instruments that record emissions in its diesel vehicles equipped with older engines. In response, the environment ministry ordered the automaker to finalize a recall plan on or before Jan. 6, 2016. The $14.1 billion won fine is the highest fine ever against an automaker in South Korea.
A securities analyst commented on the sanctions saying, "Today's measures are similar to what many other countries are doing - Germany ordered a mandatory recall, while the U.S. has begun the process of figuring out the fine amount."
South Korea Also Testing Vehicles from Other Automakers
South Korean officials said that they are testing diesel models from 15 other automakers, a process that will be finished this April. Some analysts believe that the sanctions and further testing of diesel cars will cause a drop in sales of imported automobiles in South Korea, which is the 11th-largest vehicle market in the world.
Seoul carried out its testing of Volkswagens when the automaker announced that it manipulated software in its vehicles to conceal the true amount of nitrogen oxides produced by their diesel engines. The mandatory recall will affect Volkswagen models equipped with 1,600cc and 2,000cc Euro 5 diesel "EA189" engines. These vehicles were primarily sold in Korea from 2008 to 2015. South Korea is currently investigating whether Volkswagens with the Euro 6 "EA288" engine will also be recalled.
Every country has environmental laws that govern emission standards on vehicles. These laws have done a great deal to combat pollution throughout the world and countries take them seriously. When an automaker knowingly violates emissions laws, and/or dishonestly manipulates its emissions testing instruments like Volkswagen has, the company should be prepared to face stiff sanctions, and a huge loss of confidence among its customer base.
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