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Volkswagen Could Face Just 4 Billion Won Penalty in Korea While Facing 21 Trillion Won in US
4 Billion Vs. 21 Trillion
Volkswagen Could Face Just 4 Billion Won Penalty in Korea While Facing 21 Trillion Won in US
  • By Jung Min-hee
  • October 6, 2015, 02:15
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According to industry sources on Oct. 4, the South Korean government will investigate all Euro 5 vehicles from its earlier legislation last Dec., since it believes that there is a possible manipulation of the exhaust gas recirculation (EGR) system in the Volkswagen Tiguan and Golf, which meet the Euro 5 standard.

The EGR system is a device that reduces oxygen levels that generate nitrogen oxide by making burnt exhaust gases reenter the engine combustion chamber. Since the EGR equipment is next to an engine, its control system is easier to operate than the lean NOx trap, or LNT, system and the selective catalytic reduction, or SCR, system of Euro 6 vehicles. Although Euro 5 vehicles don’t feature the LNT, the SCR, or the relevant operating software, its EGR system lowers the fuel supply and improves fuel economy. Therefore, the government thinks that there is a need to investigate the possibility of manipulation.

If Volkswagen is confirmed to have cheated on other systems as well, the company may be subject to additional restrictions and punishments due to violations of law, along with recalls. Also, the company could be at a disadvantage in lawsuits. Moreover, there is the possibility that the government will retroactively collect environmental improvement charges, from which the automaker has until now been exempted. The Volkswagen Diesel Euro 5 models are classified as low-emission cars, and therefore have qualified for many benefits since 2009, including parking fee discounts in public parking lots in the capital area and permanent exemption from environmental improvement charges.

Due to the Volkswagen scandal, there will be a law revision to increase the violation penalties of the vehicle safety and the environment from the current 1 billion won (US$859,107) to the maximum of 10 billion won (US$8.59 million). The U.S. government will fine the automaker a total of 21 trillion won (US$18.04 billion) – 44 million won (US$37,801) per car – while the Korean government will fine only 1 billion won (US$859,107) per model. Even if the Park Geun-hye administration imposes penalties on Volkswagen’s four models, which are confirmed in the U.S. to have the software for manipulating emissions, Volkswagen will face only 4 billion won (US$3.44 million) in penalties. Therefore, some say that it is a soft punishment. According to a spokesperson from the office of Lee Un-joo of the New Politics Alliance for Democracy under the Emblem of the National Assembly of Korea, the automobile management law revision to raise the limit of fines for fuel economy manipulation from the current 1 billion won (US$859,107) to 10 billion won (US$8.59 million) will be submitted to this regulation session of the National Assembly.