Volkswagen has admitted that 11 million of its diesel vehicles were equipped with software used to cheat on emissions tests. The company is now contending with the fallout, as are other automakers because various governments and regulatory agencies have begun to increase emissions scrutiny.

 

The software in the Volkswagen vehicles sensed when the car was being tested and then activated equipment that reduced emissions, U.S. officials say. However, the software adjusted the engines during regular driving as well—presumably to save fuel or improve the car’s torque and acceleration—which increased emissions above legal limits.

 

Volkswagen agreed last month to fix or buy back 480,000 Volkswagen and Audi A3 models with 2-liter engines in the U.S., although it remains unclear when the fixes or buybacks will occur and if—and how much—the company will compensate owners. In the meantime, the company’s value has fallen significantly, and it has reported record losses. Volkswagen also faces numerous legal battles, including lawsuits filed by the U.S. Justice Department, the Federal Trade Commission, dealers and vehicle owners.

 

It isn’t just Volkswagen vehicles that are being examined by federal regulators in various countries. For example, last month in France, government fraud investigators raided PSA Group offices as part of broader checks into vehicle emissions. Earlier this year the same authorities had raided offices of Renault SA. Japanese automaker Mitsubishi Motors also recently admitted it manipulated fuel-economy tests to mislead consumers.

 

Daimler also announced it has been asked by the U.S. Department of Justice to investigate the certification process of its cars. The internal probe follows U.S. class-action suits that allege some of Daimler’s cars violated emissions standards. Daimler has said it’s cooperating fully with authorities and that the suits are “baseless,” a Bloomberg article reports.

 

The suits against Daimler allege Mercedes-Benz clean-diesel models contain a device that causes the vehicles to violate U.S. emissions standards when run at cooler temperatures, making them less environmentally friendly than advertised. Specifically, the automaker was accused of using a device in its BlueTec cars to turn off a system meant to reduce nitrogen oxides in its exhaust.

 

Speaking at a recent Chinese auto show, Daimler AG Chief Executive Officer Dieter Zetsche told Bloomberg News that carmakers now need to be clearer about the way they certify their fuel-economy and emission ratings as regulators increase scrutiny over the gap between laboratory results and on-road conditions. “You can only be transparent and if there are any shortfalls anywhere, fix them and move forward,” Zetsche said.

 

Going by the rules that are being proposed, China will be the toughest regulatory regime over the next five years, Ford Motor Co. Chief Executive Officer Mark Fields told Bloomberg at the Chinese auto show. Public health and environmental concerns are driving the scrutiny, and Ford will support China adopting on-road emissions testing measures passed by the European Union, he said.

 

Indeed, China, the world’s largest auto market with more than 24 million vehicles sold last year, has extensive plans to reduce automotive emissions. A major component of the plan calls for improving vehicles’ fuel economy by about a third from 2014 through 2020 to reduce carbon-dioxide emissions.

 

Testing real-world driving emissions through on-road testing, which will begin in the U.S., European Union and China, will provide a more realistic measurement, yet it also introduces another level of complexity to an already complex process because automakers will need to change their own testing processes—and some may need to redesign equipment. As different countries introduce new emissions standards, navigating and meeting the various standards will become another challenge auto makers, their partners and suppliers must work together to address.