excavations of technical issues and unexpected in-use conditions. we know that in december 2014, volkswagen initiated a voluntary recall of nearly half a million vehicles. yet, when the california air resources board tested the fixed vehicles, they found emissions were still above the legal standard. and we know that by july of this year, the epa told bw that they would not approve the model year vehicles for sale unless the emission details to be explained. volkswagen was forced to come clean. and they ultimately confessed that they had installed a defeat device and diesel cars designed to circumvent epa emission standards for certain pollutants. we know this defeat device sets when they were undergoing testing.

and inserted control systems. and we know that during normal road use, the controls were reduced. and the car for producing up to 40 times more nitrogen oxide standards.owed by we know half a million cars in the u.s. might be affected by this. mr. horn, i'm glad you came to testify here. while we know all of the things i just talked about, there's a lot more things we do not know. and we need answers for them. for example, volkswagen has not revealed how the device affects the engine. white was installed, and how it was able to evade the tests? you have not revealed when and how the engines equipped will be fixed. whether the fix will affect fuel economy or performance of the vehicle. you have not revealed what

volkswagen told regulators over the last year as epa and the california board were trying to figure out why the emissions were out of compliance. you have not revealed whether the voluntary recalls that volkswagen set in place in 2014 were millemerely a ruse. were they trying to figure out what was wrong and fix them? for did they know they had defeat devices were only trying to buy time with regulators? you have not revealed who is responsible for this game. we have all seen the press three points, and we can speculate about what happened and why, but until volkswagen comes forward with answers and provides assurances we can trust what they say, the american people, regulators and comers are left in the dark. i hope you come prepared to answer some of these questions.

i also hope vw will be prepared to work with this committee as we move forward. hundreds of thousands of owners invested money and trust in vw. carsof them bought specifically because they were seeking environmentally friendly vehicles. now they are left with cars with much higher levels of pollution, they don't have answers about when or how their car will be fixed or what kind of car they will be left with. earlier this week i visited a volkswagen dealership in denver. i saw the control and equipment on the vehicles firsthand. these cards account from us 25% of the sales at that particular dealership, and a significant percent of sales in colorado and across the country. now because they cannot sell them, these cards are sitting on the lot. say, it isrman, you

a small percentage of cars on the road in the u.s., it is a tremendous economic impact to the steelers and also to be consumers who don't know what is going to happen to their car. that is the key answer i'm looking for today. what do we do moving forward. this subcommittee has been here before. in the last 15 years, we have had ford, firestone, gm and more. we were able to get information from all these committees help us understand what happened. most importantly, we used information to chart a path forward and help consumers affected. i hope volkswagen can similarly tell us what is happening, and i hope they will get beyond this series of terrible decisions and do something to restore the public trust. thank you. now recognize the chairman of the committee from michigan for five minutes. >> good morning.

it makes a car a volkswagen. that ad campaign swept the nation in the 90's. ltishs long enjoyed a cu following. through the years, something and cheating and betrayal became part of the game plan. there is a lot we don't know about vw's actions or motivations, and attempting to skirt emissions standards. regardless of intent they have a trade the trust of regulators, dealers and suppliers, and most important the driving public. probably the most famous congressional hearing question is what did you know and when? asked by senator howard baker in the 70's and watergate. now we learned you knew 18 months ago. we add, what did you do to fix

it, and come clean versus simply going along? ultimately the saying rings true, cheaters never prosper. we have never -- many questions about how we got here. why would one of the world's largest automakers go to lengths to avoid emissions requirements? who is responsible for these decisions and why did they, for years, even as technology improved, continued that path? if they were willing to cut corners here, what else have they done?how will you fix it and when ? will it affect the performance? unraveling these questions will take time. i don't expect we will discover it the answers today. it vw is serious about rebuilding of contrast, the leaders need to demonstrate commitment to answer these and questions haunted by the actions. this requires transparency, cooperation, and clear

communication with this committee, the epa, and also with customers, suppliers and the public. vw will inevitably pay a steep price from this dirty little secret. how it responds will go a long way towards rebuilding or further eroding the public's trust. they must consider the implications for the thousands of americans it employees, -- it employs, including the facility in michigan. they are proud of the rich tradition enterprise with the success of the automobile. michigan is one of several states that has launched their own investigations. all automakers must advance by imagination, not by gaming the system and breaking the law. we will get additional insight today but the investigation is just beginning. this hearing is an important step as we receive documents, information, and new details are

certain to emerge. i look forward to getting to the bottom of this as quickly as possible. i take this very personally. act toauthor of the protect the public, congress was very clear in the work to protect consumers from abuses from automakers, including steep fines and criminal prosecution. a has betrayed the nation, nation of regulators, loyalists, and innocent customers. it is time to clean it up or get off the road. i yield the balance of my time. >> thank you, mr. chairman. mr. horn, thank you for being here. i think it is appropriate you come before the committee, you apologize for the actions, and that you and vw take full responsibility for what has transpired. it is disappointing. i'm aware our governor has been at the chattanooga facility. i know that the governor, state

legislators, the other members of the delegation and i are quite concerned about this. you have a lot of hard-working, honest tennessee people who are at that facility. we are concerned about the actions of a few. we are going to be very precise with you and vw. it is, as the chairman said, basically the who, what, when, where, how and why. why you did it, how you did it, when you did it, lending you -- new, did it go across the brand, was it in new regulations, was it pointed at climate regulations?

this is a systemic failure. someonelso point out, could say it is a safety issue. but i say it is an issue of integrity. we appreciate you are here. we look forward to hearing from you. i want to yield the balance of my time to the vice chair of the subcommittee. >> thank you. thank you mr. chairman for holding the meeting. the others of you have spoken --ut, there should be zero tolerance for this unethical behavior. that is why the hearing is important to us. people need to understand why it happened and how and how it can be resolved. they feel they have been deceived. they were actions taken by the attorney general to file action. i want to touch on the

university. you used a fraction of the money we spend with the epa to make this discovery, and they found out, one of the cars they tested was 15 to 35 times more admissions than allowed. chairman, i want to touch on the fact that this opportunity, and research dollars at work, this was a university able to accomplish this. i'm looking forward to getting clarity to what this is. thank you for holding this and the -- i look forward to the conversation. mr. chairman, thank you for holding this hearing. we are here today because volkswagen lied. they like to regulators, customers and they lied to the american people. we all have many important questions that deserve answers. what did volkswagen due to the

cars, why, and who knew this was happening in germany and here? this whole scheme makes me question how much we should trust volkswagen, and to be honest, the committee's investigation makes me question how much we trust the oil industry in general. let me remind you of the difficult relationship with the oil industry. in 2010 the committee investigated the recall of 9 million vehicles worldwide are unexplained cases of sudden unintended acceleration. dozens of people died in accidents linked to run away toyota vehicles. in the end it was determined to new about the problems -- toyota knew about the problems. in early 2014 we launched an investigation of general motors condition -- ignition switches that kill people. they found individuals within gm knew about the deadly defect or nearly a decade before the

company initiated a recall. later in 2014 we learned of the exploding airbags in vehicles made by at least 11 auto manufacturers. the recalls began as early as 2008. they continue to investigate whether recalls are necessary and they have not determined the root cause of the defect, which has killed a number of people worldwide and injured hundreds more. aw we have volkswagen, company that told regulators that their vehicles met emissions standards but actually installed devices to bypass controls. over the past five years, the three largest automakers have come before the committee to admit they had cheated the system and lied to american customers. this seems to be a pervasive of deception in the auto industry. it has to stop. they need to know the are safe on the road and they need to know when they decide to buy a car they are getting what they

paid for. to auto industry has chosen perpetuate lies and mislead consumers. the american public is not crash test them is and cannot be treated as such. i understand you will not have all the answers today, but don't hide behind the internal investigations excuse. it is time for volkswagen to be forthcoming with customers about what you did to these cars and why. we deserve an explanation. i would like to yield my remaining time to ms. czajkowski. >> we look here a lot from outside in today. we will hear apologies, i'm sure for the deliberate deception of the american people and federal and state public health agencies. will try to get to the bottom of this issue and fully cooperate with investigators. we will hear how the use of so-called deceit devices are incompatible with volkswagen's

corporate culture. i want to tell you, i don't buy it. the american people, the epa and their counterparts around the world, have been defrauded by volkswagen. the company's word is not worth a dime. the only thing i want to hear today is exactly how will volkswagen make this right by consumers. saying it will take time to design and implement a six is fix iscient -- af insufficient. if they want it, every volkswagen, clean diesel vehicle owner should be get -- getting their money back. all of it. the american people deserve answers. there are a lot of questions, but there are also thousands of owners of clean diesel volkswagen's out there.

what they want to know is what are you going to do for them, and when. i say now. i expect those answers to be provided today, and i yield back to the ranking member of the full committee. >> thank you, mr. chairman. anyone else on this side, i would yield back. >> thank you. gentleman yields back. >> i also ask unanimous consent by the opening statements he introduced to the record. you are aware the committee is holding an investigative hearing, and when doing so has the practice of taking testimony over both. -- under oath. you have any objections? thank you. we advise you under the rules of the house and committee you are entitled to be advised by counsel. do you advise to be advised by counsel under testimony today?

in that case, would you please raise your right hand? do you swear the testimony you are about to get is the truth, the whole truth and nothing but the truth? >> thank you. yes.itness answered you are now under oath and subject to the penalties set forth in title 18, section 1001 of the united states code. you may now get a five-minute summary of your statement. make sure your microphone is on and close to you. press the button. thank you very much. chairman, other members of the committee. thank you for inviting me to testify before the committee.

my name is michael horan and i'm president and ceo of volkswagen group of america. i volunteered to come here before the committee at the outset of the inquiries in an effort to show our commitment to cooperation. we have not had the opportunity to review all aspects of this, and the investigation is just beginning. therefore, my testimony and answers will be by necessity, has to be considered preliminary and best on my current recollection and information. on behalf of the company, my colleagues in germany, and me personally, i would like to offer sincere apologies, sincere apology for volkswagen's use of programs that serve to defeat the emissions testing regime. in the spring of 2014 monday university study was published, that's when the universit public that he was published,

i was informed the epa regulations included various tendencies for noncompliance with emissions standards, and also that the agency could conduct engineering tests on their own, which could include analysis on defeat devices or other auxiliary equipment. let me be clear about this. when i was told about the epa orcess, i was not been told did i have any reason to suspect or believe that the vehicles included such a device. that theo informed company engineers would work with the agencies to resolve the issue. later in 2014 i was involved -- informed there was a specific plan to ring the vehicle into compliance, and that they were engage with agencies about the process. volkswagenr 3, 2015 disclosed at a meeting with the

california group and the u.s. environmental protection agency from model years 2009 until 2015 contained a device in hidden software that can recognize whether a vehicle with being upgraded in a test laboratory are on the road. that made the goals amid high levels of nitrogen in the road rather than laboratory testing. in the recent ongoing discussions with regulators, we described to the epa that the arategy also included software feature that should be disclosed to and approved by them as an auxiliary emissions control device which is also called a ecd, in connection with a certification process, to show that we acted immediately, we have withdrawn the application of certification for all of

those vehicles and we are now working with the agencies to continue the certification process. these events, and i fully agree on this, are deeply troubling. i did not think something like this was possible at volkswagen. we have broken the trust of our customers, leadership, employees as well as the public and regulators. let me be clear, we take full responsibility for our actions and we are working with all the relevant authorities and cooperated -- in a cooperative way. i'm here to offer the commitment of volkswagen's work with the committee, to understand what happened, and how we will move forward. u.s. department of justice, attorney general, as well as other authorities are fulfilling their duties to investigate this matter. we are determined to make things right. this includes accepting the consequences of our actions, providing remedies and beginning to restore the trust of customers, dealerships, employees, regulators and the american public. ofwill refer the reputation

a company that more than 2 million people worldwide rely upon for their livelihoods. our goal is to develop a remedy for customers. while much work is to be done, i would like to talk about how we get from where we are now to that goal. we are conducting investigations on a worldwide scale on how this could have happened. responsible parties will be identified and held accountable. thoroughly investigations have already begun, the any information and development is preliminary. we ask you are understanding here it it is important for the public to know as the epa said, these vehicles do not present a safety hazard, and they remain safe and legal. third, technical teams are working tirelessly to develop remedies for each of the group of vehicles. the solutions will be tested and then shared with the responsible authorities for approval.

there are three groups of vehicles involved each containing one of the three generations of the two diesel engines. they will require different remedy but this can only be our first step to the customers. fourth, we will examine processes, and have measures to make certain something like this cannot happen again. fisk, we commit to regular and open communications with customers, dealers, employees and the public as we move forward. we set up a designated service line, and website. we have a count for this communication. -- channel for this communication. this outline of a path forward towards the goal of making things right. nevertheless, volkswagen knows we will be judged not by our words but clearly by our actions over the coming weeks and months. these events are fundamentally contrary to volkswagen's core value tos of proving customers and responsibility to

the communities and environment. they do not reflect the company has i know, and to which dedicated 25 years of my life. our plan in tennessee is the best factory in reducing emissions. i apologize again on behalf of everyone. we will comply with authorities. we will find remedies for customers and we will work to ensure this will never happen again. thank you again for allowing me to testifying, and i look forward to your questions. thank you. >> i now recognize myself for five minutes of questioning. on september 3, 2015, pw hadtted -- pw admitted it model 2009evices in

and 2015 vehicles. to the best of your models -- knowledge, did pw stall software for the express purpose of defeating emissions controls? understanding,r it was installed to this purpose yes >> here it a new testimony, of noted you were made aware potential emissions compliance is the spring of 2014. you also noted discussions at the time about penalties for noncompliance in the epa's ability to test for devices. at that time, were you aware or informed that these vehicles contained defeat devices must work mr. horn: --? mr. horn: no. >> when did you first learned that they contained the device? mr. horn: around the september 3 meeting, couple of days before. >> why were you having discussions about devices in the

if there was no knowledge or concern that these vehicles contained a device? mr. horn: the university of west virginia made the study. there was a jetta and thought, -- a passat, and another off-road vehicle. results were communicated. in this context i was told by our experts in the auburn hills office, and four months into the market, that of course not complying with emissions standards is relating to fines and hefty fines, specifically in the u.s. those experts, including the german technology department, checked on the study and the results. you also mentioned it was a small team. results have been published with emissions that went overboard. that they were checked. -- they also looked at

responsible departments and there were a number of departments in germany, and how to possibly fix this. there was the notion in this indication that also the epa or agencies could check on their --, which to mine degree four auxiliary devices, including defeat devices. at that point, i had no understanding what it was, and no indication whatsoever that a defeat device could have been in our car. >> let me go back. the new chief executive has been quoted in media reports saying that only a few people were involved with deception. i don't take much comfort in that, especially knowing volkswagen has been known for superb engineers and mechanics. should they have picked up on this question mark is it true they dump on this

because the cars could not meet the more stringent emissions standards for diesel engines? yes, tear last question it appears to be. the newspaper articles, i don't want to quote. the investigations are preliminary. one week the group did the and then the, entire investigation on this matter is turned over to an whichal agency law firm is now going through the system outside advice. >> what we find amazing is that virginiarsity of west discovered this, and your army of engineers and talented mechanics did not know something was amiss. i'm sure we will have more questions. i want to ask, in terms of the status for remedying these

devices, who is responsible for developing and testing a solution? mr. horn: the responsibility for developing and testing the engine and software's lies within the engine and drivetrain divisions in germany, for the two cylinder, four-cylinder engines. >> will this require a software patch or changes to the actual vehicles architecture and hardware? mr. horn: yes, thank you for the question. we have to look at it differently for the three groups of cars. roughly 500,000 cars are affected, but out of those, around 430,000 are the generation one vehicles. those are the early vehicles started in 20 -- 2009. for those cards, we believe software only solution will not be possible. frank, if itite was possible they would have done in the first place. for those cars we are working on

software and hardware solutions. ,here are different strategies a converter and a tank. this is something which, hardware engineering is complex and takes time to develop. the generation to vehicles, -- passat, 90,000he cars here in the u.s., this would probably just be a software solution. it is tested and could involve one or the other, a sensor. disclaimed -- explained to you is being discussed. for the generation three vehicles -- >> i'm sure other collies will

be asking more questions. but now i need to yield five minutes. >> thank you, mr. chairman. mr. horn, your company acknowledged that it installed defeat devices on a number of models dating back to 2009, correct? mr. horn: i have a problem understanding? >> mr. chairman, can you please have the quiet in the room so mr. horn can understand. >> if everyone will please be quiet. thank you. >> i will ask that can -- again. mr. horn, your company has acknowledged it installed on a number of models in 2009. mr. horn: yes. >> do you know how they actually work at this point? mr. horn: personally, no. i'm not an engineer. >> does someone at ew no? i believe this is also

within the investigations. >> can you give us the information when you find out? mr. horn: we will. you mentioned the west virginia university study conducted in may of 2014, that found the real -- there were not admissions that were exceeding epa standards by as much as 35 times. following publication, vw represented to the california resources board and the epa that they were due to technical issues and unexpected conditions. correct? mr. horn: i'm sorry, you cough -- the time and i can hear >> i will ask again. after that study by west virginia university, isn't it true that vw told the epa and california board that the

increased emissions were due to technical issues and unexpected in use conditions? mr. horn: yes. representations at the time were in fact, incorrect and false? mr. horn: yes. >> to your knowledge, did anybody at the volkswagen group of america know that those discrepancies were due to the defeat devices when they made those representations to the regulators? mr. horn: to my knowledge, no. >> no one in the u.s.? mr. horn: no. >> ok. in december 2014, bw proposed a recall of 500,000 vehicles to resolve the technical issues. is that correct? mr. horn: yes. >> and a number of those vehicles were recalled. mr. horn: most of them. >> after they were recalled, convoy near regulators still said -- california regulators said the fixed did not work. mr. horn: correct.

>> to your knowledge, did anyone at the volkswagen group of whenca know about these the company announced the recall in december 2014? mr. horn: to my best knowledge, no. >> when did you personally learn of the defeat device and under what circumstances? mr. horn: around the meeting on september 3 with the epa. >> when the chairman asked you about these cars, i am concerned about what we are going to do about the 500,000 cars we have on the road in the u.s. the first thing is, as you just testified, about 430,000 of those cars cannot be fixed by a software-only solution. is that correct? mr. horn: yes. >> that's because of the way that the engine is designed in these vehicles, correct? mr. horn: i would say not the

the aftertreatment systems. >> right. i have got to say, i have to acknowledge my wonderful dealer who is here today. he let me comment talk to his wonderful mechanics on monday. they gave me this chart. apart, but ite it was too heavy and i would have to pay $2000. i decided to take the chart itself. this is a chart of the exhaust system on those cars. you can't do see, a minor fix to fix the problem. vw going to do for these 430,000 cars so that users can use them and they pass the emissions test?

mr. horn: from this distance i -- ot see the chart, but >> it is the exhaust system. what can be done to fix it? mr. horn: there are two scenarios. >> these are for the cars that the software will not work. mr. horn: we are talking about the generation one car, the 430,000 cars. the picture you have shown, and the treatment, the software does not work because otherwise they would have done it. >> right, so what are you going to do? mr. horn: two scenarios. either in the rear tank to put something in there, or a catalyst. >> but those cars do not have the tank right now. mr. horn: no. >> this would be a major fix. mr. horn: yes. >> what is the timeframe for this? mr. horn: we are still working

on the timeframe, and it is too early to say when the fix will take place. >> when are the dealers going to be allowed to sell the cars? -- then: the dealers issue with the dealers is that 16 certified and stopped sales on our own. >> when will that be fixed? mr. horn: there are two scenarios. the first we are now trying to get a conditional approval with the epa until we have the final software fix at the beginning of next year. what are thentime, dealers and customers supposed to do? the ones who have these cars. mr. horn: in the meantime, no customer can buy a car because it is not available. with the dealers, we have started a program to work with them to also help them financially and communicate -- >> of the 430,000 cars that are

already on the road, what are those customers supposed to do? their cars cannot pass the emissions test. andhorn: the epa has said, repeated this in the statement, these cars are legal and safe to drive. there is no indication they did not pass any admissions test. we need to recognize the chairman of the full committee from michigan. >> thank you. i want to go back to the specifics of the defeat device. i live in michigan. where i live, we don't need to test our cars for admissions on an annual basis as many states require. this defeat device actually set up? so that it was different when an individual drove it down the road versus taking it to a service station and getting the emissions sticker required?

i am -- >> i have been told a couple of things, just walk me through how that can change the system. what happens question mark mr. horn: i can share my best knowledge that i am not a software engineer or engineer. let me try to explain. my understanding at this point is the software was designed that the vehicle, or software could detect whether it was on a testing laboratory environment or on the street. the software can detect whether the steering wheel made an angle. there will be other parameters like maybe speed and change of speed. >> maybe the weight of the driver in the drivers seat? mr. horn: i don't think so, but maybe. i don't know. easier tot it be

develop software that would just remove that? mr. horn: yes, the software will be ready -- >> but when that happens it will not meet the emissions test. mr. horn: regarding the model year 16 and 15, the generation device will be january off, and onwards will be taken out and they will pass. >> how many vehicles will not pass? of the ones you have identified? -- horn: >> you will be able to do that with later versions? but not the earlier versions. they will not be able to pass by , there willdevice be a number of cars that will not meet the current standards? the current standards,

yes. >> how many are there on the road? 500,000, a total of 430 thousand generation one vehicles. 95,000 generation to and around 70,000 generation one vehicles. are out of the league of compliance. as the epa is that all of these cars are legal and safe. we are not selling the cars that the owners can legally drive. >> your dealers across the country, they have their finance where they have quite an inventory of cars that they are now unable to sell. they have paid in advance for those under the financing plan that dealers have, and they are not going to be a will to sell them for a number of months, perhaps even six months at a

minimum, until the fixes can be done. what type of remedies are you offering to dealers in terms of financial incentives, knowing that they have paid for the cars and lost a lot? -- has to be ais pretty big loss. mr. horn: this is also one of the things that troubles me very much, because we brought profitability up there. but i will pay you, on friday the 18th, the violation notice was communicated. some of the people sitting behind me, we issued our first financial relief aid. cars, and the used new cars on free flooring. we took the bonus pressure off of -- we paid maximum bonus for each car sold and took out the customer satisfaction target objectives and paid maximum

customer satisfaction bonus on those cars. more than $1000 -- more than $1500 per car. coming towards october, we provided every dealer around the u.s. with a discretionary fund, which was explained to them through the district managers, which was wired to the dealers october 1. i don't want to call out the number, but a significant amount of money. for them to have flexibility. no accountability for us, fluffy ability for the most urgent customer cases, or put the money where they think it will be for phil. when i come out of this -- where it will be fulfilled. when i come out of this hearing, we will look at the next programs and help dealers with cash flow. one thing is clear, and i am theere about this,

profitability is my first objective. this is one part. also on friday, we looked intensively into customer remedies. they will be the first scenarios on the table. you, it is time to recognize the ranking member of the full committee for five minutes. >> thank you, mr. horn your statement so far do not give me much confidence we'll ever see a fix for the vehicles that are impacted. can't be fixedu by software only, you don't have a necessary timetable when it will begin. have you been given enough information about how the device affects the engine to actually make informed judgments on whether the fix will actually work? how do we know what you are proposing to do it will work? mr. horn: whenever i tell you

, comingay is agreed from the technical engineering department. alongside actions in europe, we have to have our actions in the u.s. >> understand, but is it fair to say you really don't know whether you can fix these vehicles to achieve the emissions standards? mr. horn: we know we can fix them. but what happens with regard to other things like fuel economy, engine performance? people bought the vehicles thinking they will have -- meet admissions standards, have good good engine, performance. can you guarantee any fix does not affect fuel economy or engine performance or both? mr. horn: at this point, my understanding is if we correct the nitrogen oxide emissions to

the emissions standards, the customers will get the mpg on the label. whether the full performance of , maybe on top speed, there might be one or two miles per hour missing. but this is something we will share with agencies. current understanding is the customer will keep the label miles per gallon. >> the concern i have is when you buy one of these cars, you are relying on the emissions standards, and also the fuel economy and performance is good. you get to the image -- issue of damages. and the fixeder is not achieved good performance or fuel mileage, i will expect to be compensated in some way if that is not the case. i just remain concern that any fix will substantially change the cars. it is unfair to the consumers

who relied on the cars, because they expected them to perform a certain way. you are telling me that the fix will guarantee good performance and guarantee good fuel economy? to my currentid understanding in achieving impactns standards, the may have a slight impact -- on performance. this is a discussion for the agencies, but of course we will look into compensating customers. if there is significant differences, this will be part of the discussion. >> let me get to another issue. what about the impact on clean air? we know there is all kind of health impacts, asthma, other respiratory illnesses that can affect people and send them to the hospital or get sick because of these issues. you agree pollution can result in serious health and environmental effects?

mr. horn: i have also read the epa statement that in general, not specifically to volkswagen, they have indicated there might be respiratory problems that to hospitalead visits. >> what will you do to rectify that? how are you going to mitigate the harm admitted into the air? my understanding is admissions are up to 40 ton -- 40 times the allowable limit. what are you going to do with regard to the pollution and the impact it may have had? mr. horn: i think first of all, many different studies, i would go back to the epa yesterday of what they said. it will be part of the discussion. but i would also like to point out if you look at 100% of nitrogen oxide emissions in the u.s., the truck and -- industry has 5%.

our group has 12% of the 5%, which is .2%. out of this funny percent is tdi .2% is tdi. i am not belittling this, but this will come up and needs to be addressed. >> thank you mr. chairman. thank you, mr. chairman. mr. horn, you said profitability is your top priority. mr. horn: for the dealers, yes. i would hope safety, quality, and integrity are top priorities and profitability comes along as a part of that picture. let me ask you about this. are you going to buy back the inventory the dealers has? mr. horn: no our plan is to fix the cars. on.et me move have you identified the

individual or group of individuals responsible for the defeat device? mr. horn: these investigations are ongoing. >> you have known about this since spring 2014. mr. horn: we have known about this since september 3 that the violation is there. since the time, and september 18 notice of violation, the board has asked -- >> but you knew there was activity since spring 2014? mr. horn: i did not. >> you did not know it in the spring of 2014. you just learned about it september 3. mr. horn: yes around the september 3 events. >> ok let's go to the six-point remedy plan. you have talked about point three, developing remedies. i would assume if this landed on your plate september 3, that you all have put all efforts and energy into this plan.

correct? into the remedy. mr. horn: correct. >> very good. let's go to number one. volkswagen will examine its compliance processes and standards and adopt measures to make certain something like this cannot happen again. why don't you give us a little andof specificity on that, what, if any steps are currently underway to handle these compliance issues? what did you start as of september 3, 2015 and what is your timeline? how long is it going to take you to bring this into compliance? ceo ofn: i and the volkswagen group of america, i can only report to you on what is managed i volkswagen headquarters worldwide at this point in time.

they managed the investigations in terms of who did what, when, how and why, and what we need to do it to rectify this in terms of process adjustments. >> you are saying as of now, you do not have a plan? mr. horn: as of now we are still in investigations, yes. you to can we expect have a plan to handle compliance, to make the owners whole, to makes the dealers that have trusted in you whole? also the individuals employed by your facilities, when are they going to have certainty as it relates to the job? you say you are still investigating. when do youline, expect you are going to be able to say, this is the way forward?

mr. horn: you mentioned six points, we started with the first one. i don't have a timeline. are working instantaneously with dealers and developing plans by the week as we go. you can ask the folks behind me on whether this works or not. for the customer, it depends on technical remedies. this is generation three, january of next year we will start. in order to give software to the woencies, generation t middle of the year. generation three will probably be later because of the technical difficulties. i apologize for not having fully fledged plan right now here. >> you are certain it is going to be a multi-year plan? you are certain to remedy will end up being a multi-year approach? mr. horn: yes. cars, and the repairs

can take 5-10 hours. if you look at the regal history in the market, these actions take two years minimum sometimes. when the fix is available for everybody, including parts and discussions with agencies. >> my time has expired. i do have one other question the second point in your plan. i will yield my time. thank you, mr. chairman for calling the hearing. mr. koren, according to reports, the defeat device is found in nearly 500,000 vehicles. are you confident in that number customer could it be more? mr. horn: we are very confident in this number. have you calculated the loss

in value to customers? mr. horn: not yet. that is a matter of not only investigation, but cut relations are ongoing and friday we will look at the first scenarios. >> you called the investigation preliminary, but you have known about this for a year and a half, the problems for skin to light in may 2014. inproblems came to light 2014. mr. horn: no that is not correct, the study was published in there was no reason to believe there was a device in the cars. >> you found out according to reports in 2014, that there was an issue? mr. horn: emissions if you, yes. >> what did you do at that point? mr. horn: at that point the plan tapped to, and in july 2014,

they presented a plan to me, it was agreed and discussed with the product safety commission manage all the recalls and service action worldwide, including technical procurement, and legal services, they came back with a plan ing the results were correct, and a clear time on one they could get fixed which was also mentioned and one of the opening statements. >> do you feel like you have been personally deceived? mr. horn: yes. >> explained that. mr. horn: i worked 25 years for this company. the on to my personal objective of dealer profitability, integrity, quality and not cheating was always a given for the company. i am as moved as my employees. >> another group feeling the onect of the device

defrauding are the dealers, and their hard-working employees across the country in addition to consumers. recent article noted the -- dealers are facing a flood of angry calls and e-mails from volkswagen owners who feel betrayed because they have believed they bought a car that polluted less without and theing gas mileage, performance of that comes with a diesel engine. how many dealerships are there in the u.s.? vw and 350 audi. and the steelers are the front line for unhappy customers who feel betrayed -- these dealers are the front line for unhappy customers who feel betrayed. one customer said it was the biggest fraud they had ever seen. what do you have to say in response? what do you tell business owners

and employees whose livelihoods depend on this? i made a dealer video that was sent out immediately, and the dealers showed it to their children and families and employees, because they said it was the right thing on what we are approaching. -- etail how pw is in print detail how vw is informing them. mr. horn: as soon as we have the information necessary, and have discussed this with epa about the timing, they will be informed. >> they are not getting any information right now? mr. horn: of course they are. -- whathe tells? details? we letn: first thing, them know about the financial. we increased to $2000 loyalty program -- that means we get

them started and don't let them dry out in the field. >> is that a direct payment to customers or just to dealers? mr. horn: the bonus payments and floor plans are to the dealers. discretionary funds is to the dealers. the incentives are for them, that they can manage to bring loyal customers in. is forintention there the dealers to contact customers who have purchased cars, since model year 2009? mr. horn: yes, as one of the possibilities, yes. vw is not giving any direction to dealers and employees on contacting customers? course, we are setting up questions, guiding dealers with real-time -- the same information that goes to

those peopleers, are also the frontline. they need the same information. as soon as we have it, the other people get it as well. >> what have you told others about how existing models will be affected, cars that have been sold and cars that are sitting on the lot? mr. horn: we informed the dealers directly september 18 in a call and followed up with letters and videos. >> thank you. mr. barton for five minutes. thank you mr. chairman. thank you for organizing this hearing. i am not a registered professional engineer anymore, but at one time i was. i still am an engineer by training. my daughter drives a volkswagen beetle, and my former step what -- stepdaughter drives a

volkswagen jetta. i have always had the highest respect for volkswagen, i think it is a fine company engineering wise and product wise. but i must tell you, it is extremely disappointing to look at the, i don't know the right immorality of the corporate decision to knowingly and willfully cheat on admissions standards. volkswagen is one of the premier autovariant -- namebrand manufacturers in the world. it is a reputation that has been gained over the last 50 or 60 years. to have a company of your stature knowingly and willfully making a decision at the highest levels of the company, to put a software program in your

is meantthat intentionally to deceive, or cheat on u.s. emissions standards, to me is -- i would not have believed it if it wasn't factually proven. i first question to you is, am told this was a decision made in germany at the corporate level. is that correct? mr. horn: the investigations are ongoing. to my best knowledge, the corporation in no meeting has authorized this. this was software engineers who put this in for whatever reason. i would also like to find out.

>> so what you're saying is that the president of volkswagen international did not know about this when it happened? mr. horn: to my understanding, this was not a corporate decision. this was something individuals did. >> ok, that's not what i was led to believe, but i take you at your word. i'll ask a second question. i.e.did senior management, the president of volkswagen international, the executive vice president, whoever your corporate-to-day officers are, when did they learn of this action? mr. horn: to my understanding, also around the september 3 notification of the agencies. >> but it occurred years ago.

mr. horn: yes sir. >> do you really believe, as good as well-run as volkswagen as always been refuted to the, that senior-level corporate managers, administrators, had no knowledge for years and years? mr. horn: i agree, it's very hard to believe. >> that's and honest answer. i appreciate that. i don't know what to do, but i do know that you can have an honorable disagreement about , and we'vetandards have that on this committee, but as somebody who voted for the clean air act amendments and as a conservative who believes that if it is the law, it should be and corporate, especially international

corporations, should honor those laws, your company has not. i don't know what the penalty should be, but it should be more than just a slap on the wrist. i'm going to listen to the rest of the testimony and the questions and the staff recommendations, but in every other case since i've been a congressman, when we've had problems with manufacturers of automobile manufacturers, in every case, something happened that was really a mistake, and accident, that they just didn't foresee it. that's not the case here. if there was a knowingly willful decision to deceive in one of the most important markets in the world, that sir is just wrong. mr. horn: i agree. >> thank you. i now recognize mr. kennedy for five minutes. >> thank you, mr. chairman.

mr. horn, thank you for being here today. you've said that this investigation is ongoing. i appreciate that. i do want to go back to what a number of my colleagues have gone to with regards to the timeline. my understanding from your testimony was that in the spring , may of 2014, was when volkswagen became aware that there was some issue with regards to emissions? mr. horn: yes. >> and it was from may to december that epa launched investigations into the emissions and the company itself started an investigation as to what led to that oddity with regards to the emissions testing, right? mr. horn: i can't answer this, really. i know that the actions to remedy the findings were discussed with epa.

whether they have undergone investigations between may 2014 and december 2014, i don't know. to userds, we started the new software. epaf i tell you that continued an investigation after that preliminary report from vw, then december 2, 2014, shared test results and proposed a recalibration fix, is that accurate? mr. horn: yes. initiated avw recall to deal with that issue. 2015, testing discerned whether the fix that vw proposed fixed the underlying issue. 2015, there was laboratory and on road testing

to determine the efficacy of the recall. results were shared with vw and the epa prompting a series of technical meetings. in the course of those meetings, vw disclosed that there were several issues that the 2015 model of the improved scr vehicle had a second calibration intended to run only during confirmatory testing. there was some knowledge at least in july of this year that there was some manipulation of software code with regards to the testing, was there not? mr. horn: this meeting you're referring to, i don't know. i can tell you that the first to me and my back intention was on the 20th of july, when my people came to me and said, we don't get the diesel certified, i wrote a jacob in research

and engineering and escalated this. the explanation was twofold. there were new systems. and there is still information missing. my team did not have this information. only in the weeks afterwards, it started to unfold. thef i'm understanding broad aspects of your testimony, this essentially was not a company decision, but a decision made by a number of individuals yet to be ascertained. is that accurate? mr. horn: that's my understanding, yes. >> so as of this morning, there's four individuals that have been suspended, is that right? mr. horn: i don't know. >> to your knowledge, has anybody been suspended? mr. horn: i can't share names

with you. >> has there been anybody suspended? has anybody, as of now, after volkswagen knowing of some inconsistency with test reports, has anybody been suspended or lost their job? mr. horn: to my understanding, there's been three people suspended. i cannot share the names here due to german law. >> you mentioned the figures roughly, that this would take 1-2 years, 5-10 hours per car. do you have any estimate as to what the direct losses for volkswagen would be? mr. horn: i think the losses are depending on the fines we will get, and also on how much money it takes to fix those cars, and how much money we will have to pay to compensate the customers for what we did. this is a whole lot of money, i'm quite sure. >> i think the overall question

that you're sensing from myself and colleagues is that i understand this is a decision you're indicating was made by people underneath you. it does get to the corporate integrity of the company. what is going to be done to restore faith in the overall corporate structure of volkswagen? mr. horn: first, it was not done by people under me. i'm the president and ceo of volkswagen group of america. those things have been developed in germany, which is totally out of my jurisdiction. second, with the compliance investigations, we have to learn and use this opportunity in order to get their act together. 600,000 people worldwide have to be managed in a different way. this is very clear. recognize the vice

chair, mr. mckinley, for five minutes. >> thank you, mr. chairman. first, you opted not to challenge the decision, the research that was done. you've not challenged the research that was done. you did knowingly violate it, correct? mr. horn: i don't understand this question, i'm sorry. >> you opted not to challenge or appeal the findings from the wbu. does that mean you knowingly violated? mr. horn: no sir. >> you did challenge and appeal the findings? mr. horn: i did not challenge -- ise software actions was worldwide service and parts

executive for volkswagen worldwide. i've been to the product testing committee. i know the how the system is working. i'm not a technical expert. >> let me get to my question. fines -- we just had a situation where a small poultry farm was fined $17,000 of a day. we've seen steel mills being $3 million, $5 million, $7 million, until they clean up discharge into a river. , i think you can understand, there ought to be consequences for this violation. assume you're accruing something on your financial sheets for what could be an expected penalty for having violated the laws of the

united states. can you share with us or will you share with us what you are accruing on your balance sheet for penalties? mr. horn: for the time being, there's official information that the company has accrued 6.5 billion euros in the first step in this year. maybe this is enough. maybe not. i don't know. the rest will have to be worked out with a specific expert. >> thank you. you have to provide a certificate of conformity with epa standards. from what i understand, the defeat device was not included in that certificate of conformity. is that correct? mr. horn: that is my understanding. >> can you share with us why someone tried to deceive the american government?

mr. horn: because those people who did the applications most probably did not know that it was in there. >> can you share with us who responsible? is this 1, 2 people? mr. horn: we have an office called eeo in auburn hills which is directly linked to the german research and development department. they work together. they get all the information, the results, testing, technical specifications, and file the applications for conformity. >> thank you for testifying before us. last question, many of us have been talking about this defeat device. for the american public to understand what this is, can you defeat devicehis is and how it functions? mr. horn: to my understanding,

the defeat device is not a device, but a software code in the engine and exhaust system management which detects whether a car is in the testing environment or whether the car is on the road. one example is the steering wheel angle and how many times it's been changed. once the car is on a dino, nothing changes. on the street, the steering wheel changes. since there are so many sensors, this is one example the people ,ave me on how this device which is a software code, works. so if you don't know this, it is very difficult to detect from my limited technical understanding. >> thank you. >> i know recognize mr. kelsey for five minutes. >> thank you, mr. chairman. i have a letter from volkswagen that was sent to one of my

senior staff. she is an owner of your car. i remember when she bought the car, how excited she was about the clean diesel. the letter says your vehicle remains both safe to drive and legal to drive. you do not need to take any action at this time. all we ask is for your patience. if i were a driver of one of these vehicles contributing up to 40 times the amount of emissions, i would want that addressed right away. i have a son and a grandchild who regularly uses an inhaler. i'm not excited about contributing to or driving a car that has that kind of emissions. how much patience is my staff supposed to have? what is the timeline here? what is the best scenario and the worst scenario in terms of timeline for fixing this? mr. horn: for the generation 3

cars, the timeline is the beginning of next year, complete fix. for the generation 2 cars, it is still under development. it won't start, from my judgment, before middle of next year. for the generation 1 cars, the biggest fleet, i cannot give you a date right now. but within the next couple of weeks, we will start discussing those scenarios with epa and the development guys. >> so these cars unfixed could be on the road for more than a year or two years? mr. horn: more than a year, definitely. >> i wanted to follow up on a question that mr. malone asked. it sounded like you were saying the fix could manage fuel economy, engine performance, and emissions, that all that could be fixed. volkswagen do that

initially? why wouldn't you make a car that would achieve those goals? mr. horn: i think it's a great question. >> i can only assume that maybe cheating was cheaper. mr. horn: to my understanding, what i've learned, some people have made the wrong decisions to get away with something which will have to be thought out. >> have you considered financial compensation, for example allowing customers to actually return the car for what they paid for it? mr. horn: this is one of the areas we are looking into in terms of how to compensate our customers. >> providing rebates for lost value of the car? mr. horn: sure. >> and what about right now, if i had one of those cars and i wanted a loner. would you compensate the dealer to give me a loaner? we would have to

discuss and consider this. right now, i would say no, because the epa has said these cars are legal and safe to drive. though you know there's up to 40 times more pollution, if i went to my say, we willght give you a loner, the company would not do anything to make your customer happy? mr. horn: there's a general policy. this is why we gave the dealers the discretionary funds to help customers. loaner cary do a program or take them out of the car, whatever they think is best in this situation, they can do with this money.

no questions asked. >> but there's no policy that sdalers can say that loaner would be available? i realize that 500,000 loaners would be a hard thing to do, but you see how that would be a desirable remedy. mr. horn: i understand your point, yes. >> as a consumer advocate all of my life, this is pretty shocking for people, to find out that the company -- we found a number of recalls. i had a recall on one of my cars. but to find out that a company has deliberately cheated, it seems to me that asking customers for patients is just not sufficient. i heard people on the radio who were repeatedly saying, i just want you to take back my car and

give me the amount of money i paid for it. i don't want that car. i don't want a fix. because it may not provide what i thought i was buying in the first place. i would hope your company would consider that as a primary remedy. i yield back. >> thank you. the chair recognizes dr. burgess for his five minutes questioning. >> thank you, mr. chairman. fromas far ideologically insen kelsey as possible, but think -- and i am not here to provide you advice, but i think she is giving you good advice. i have been on this subcommittee for over 10 years. i've been through toyota, general motors, now we are doing this investigation. let me just suggest to you and let me suggest to your corporate structure in germany that being dismissive and minimizing the problem that is faced by

consumers, dealers, suppliers, is not in your best interest. and it will hurt you. i would be aggressively compliant and aggressively trying to make it right for your customers, dealers, and suppliers. in the grand scheme of things, i actually believe that will be less costly in terms of dollars, in terms of reputation, and just in terms of the endurance of the brand in the united states. this committee is significant. our history with your company goes back a significant way. now i've gotten that off my chest. let me ask you once again, are these vehicles safe to drive? mr. horn: yes. the epa has said these vehicles

are safe to drive. >> so this is unlike some of the other recalls we've talked about in this subcommittee, problems with airbags, problems with electronic controls. these do not pose an immediate jeopardy to the light of the driver or passenger's. mr. horn: i trust the judgment of the epa, yes. >> trusting judgment is what we are doing here today. we are talking that trust factor. stressed that you are the ceo from volkswagen of america, correct? do you travel back and forth to germany from time to time? mr. horn: right now, not much. usually once a month. evolved,s problem has have you gone to the engineers in germany and said, guys, what's up here, how did this

happen? have you looked at any lines of software code where someone has identified for you that this happened? have you held in your hand a defeat device that was added to an automobile? mr. horn: i've taken out mr. , ander of conference rooms i'm talking intensively to the engineers about how we will make this right. two other questions, how is this possible, we didn't know ourselves. >> do you understand how that defies credulity? --e is a software program this had to be a team of people who were working on this. you've got these rascals in the epa in the united states and they are hard to deal with so we want to do something to sell our cars. we will just trick them.

and then somehow, you're going to integrate that into the supply chain of a multinational corporation and nobody knows a darn thing? that's what you're asking us to believe. you understand why, you've heard it a number of members, this incredulity that that could in fact happen in a large multinational corporation. mr. horn: i fully agree. >> have u.s. to that question to the people superior to you? me,horn: the superior to but guy is not on board anymore. he resigned due to other reasons. >> i almost don't know what to say. domaintly, in the public , in the middle part of the last decade, there was some suggestion that volkswagen, in an effort to sell its diesel high mileage vehicles in this country, was in the process of leasing software to deal with

this emissions problem from another company. is that correct? blue tech software, i believe is the name? mr. horn: i've read this in the newspapers. >> so it is in the newspapers. have you yourself looked at, why didn't they look at this and stop those negotiations for those leases? what changed? -- diddevelop suck tech we develop some technology at volkswagen? these are questions that have to be answered. mr. chairman, i appreciate mr. horn being here. i think that we are doing this hearing prior to the time that your document production deadline had expired, so we recognize that you're here voluntarily and it is your sincere effort to comply with the wishes of the committee, but all of us represent dealers, consumers, suppliers, and their

lives and livelihoods are extremely important to us. that is what we've got to keep first and foremost. i yield back. thehe chair recognizes gentleman from texas, mr. green. >> thank you, mr. chairman. we have other committees going on. you will see members going in and out during the day. amazedfirst heard, i was that a company as great as volkswagen could let this happen. executives maybe who didn't know. the image of the company, not only in our country but around the world, is so great. our committee wants to get some answers. i would like to understand more about volkswagen's investigations.

news reports have discussed several investigations initiated by volkswagen. mr. horn, please explain. can's own investigations into this incident and how they are different from each other. mr. horn: the investigations started, i talked yesterday to our group of revisions, went on with our group revision department, audit department, until september 29, and all the documents, although preliminary documents were turned over to the american law firm who is investigating this on behalf of our supervisory board. discussedports have several internal and external investigations. so that was the only one you had , the officers from september 22-29? are there any other investigations volkswagen is conducting? mr. horn: to my understanding, after the notice of violation on

september 18, the investigations started right away. i don't know of any other investigations. actions innow if the the united states or germany or both -- mr. horn: worldwide. commit to sharing these investigations with the committee, the results of these investigations? mr. horn: i commit to get as much money as possible -- as much information as possible to the committee. the carmaker supervisory board met to discuss preliminary findings. that is a quote. what were these preliminary findings revealed last wednesday? mr. horn: sorry, i'm still a little confused. could you repeat your question? , theere's a quote

committee of the carmaker's supervisory board met to discuss preliminary findings of a probe into the scandal. what were these preliminary findings? mr. horn: our own supervisory board of volkswagen ag. i don't have access to these preliminary findings. >> can you get a copy and share it with our committee? mr. horn: i can try, sir. >> ok. you are the ceo. mr. horn: i'm the ceo of this company, and then there's a supervisory board and a people who are quite above me in germany. the supervisory board has to make this decision. with the commitment our company has, there's a very good chance the company will provide the documents to provide more clarity to this issue. you beingi appreciate here voluntarily. it would be great if we could

get that for our investigations. according to a september 30 news report, volkswagen's supervisory board said, these people who allowed this to happen or who made the decision, they are acting criminally. they must take personal responsibility. mr. corn, do you agree with that? mr. horn: yes sir. >> do i have your commitment to addressing the roots of the deception? mr. horn: sure. >> our committee is ongoing. i appreciate you being here. i yield back my time. >> thank you. for the rest of the members that have questions, i know we've got a break in 20 minutes, but we've got seven people that want to speak. we are going to be very short on the time frame. the chair recognizes mr. griffith for a short list of questions. >> thank you.

as you've heard from others who have owned the cars, i'm one of those as well. my mother was able to afford her first new car, which was able to megan. that is what i learned to drive on. i have inherited my beetle, which1972 i still have. in the 1980's, i drove a rabbit. in the 1990's, i bought a jetta. when it got close to 200,000 miles, my mother convinced me that volkswagen's couldn't go on forever. she might have been wrong. i sold that car and drove a passat until this summer and got 376,000 miles. the people who bought it for me are going to tell me when it crosses 400,000, they think there won't be any problem doing that. passatckup to my 2003

that was going and going like the energizer rabbit, i bought a 2012 volkswagen diesel. everybody else is talking about what our consumers thinking. you are looking at him. i'm your volkswagen driver who has always trusted your company and i'm very disappointed. so what are we going to do? that you'veated notified the customers. i have checked with the previous owner. i bought the car from a friend. they have not received any notice that this 2012 diesel passat is affected. when you go to the website, it says that you received notice from the epa that some of your vehicles don't comply, and among the included vehicles is the 2012. if i didn't have, because i'm

not skilled like chairman murphy , i couldn't take a car apart. i had a hard enough time figuring out i had to get the plastic lid off of the engine to try to take a look at it. when you see that and it says some of the cars are affected, then you see a volkswagen document that says discrepancies ea te to vehicles with type 189 engine and it doesn't say anything about a ea-189 engine -- the team on the committee here and my staff have figured out i'm affected. we know that. but this was done at great trouble. i received no letter. i can't tell for sure. we found that there was actually where you canu.k. actually plug in your vin number

and it will tell you if your affected. i would encourage you to consider that. not everybody is capable of taking apart the engine and figuring out if they are ea-189. the other question is, and my generation 1 or 2 austi? mr. horn: if you have a 2012 passat, i would think so. >> this is something else you websitent to put into a that says you are generation 1 or 2. it sounds like the fix to the generation 2 is more simple than the fix to the generation 1. am i correct? mr. horn: yes. whatd i would have to echo representative should kautsky and dr. burgess had to say.

when you buy a vehicle, even if you bought it used, and it says under federal emissions control system defect warranty, was designed, built, and equipped so as to conform with all applicable regulations in the united states, and is free from defects, etc. -- i believe that i was sold something that was different than what it was purported to be. offink you are much better to come up with a program that by these cars back, because i folkstand it wasn't your that made this mistake, it was the folks in germany, but you've got to restore trust. one of the ways to do that is to stand behind your vehicle. version, something was wrong with the paint. no questions asked. i took it in and they said, not

a problem. it was done. never had another problem. this is a much bigger problem. volkswagen needs to say, ok, we understand. we will buy your car back at the fair market value prior to this notice coming out. with that, i yield back. thank you. we have now 12 minutes. i'm asking you to please keep your questions short. the chair recognizes mr. yarmuth from kentucky. >> thank you. i suspect that i should be feeling a sense of shame fried freud because fords are made in my district. i'm not really taking any joy in any of this. i have a couple quick questions.

the article i read said there were 11 million vehicles worldwide affected by this. they contain the defeat device. cost tothere's no added put it in since it is just a line of computer code. would that be right? mr. horn: seems very logical, yes. >> my question is, how many countries that these 11 million vehicles were sold in have emissions standards that would have been defeated by this device? in the united states, we are talking about roughly a half million cars. what are germany's emissions standards? are they stricter than the united states? mr. horn: there's many countries affected. all the countries in europe are affected. emissions standards in europe are different from the u.s. nitrogen oxide is much more

stringent here, five grams i think per mile. in europe, it is 30-40. this is quite higher in europe. but in europe, what is stricter is the diesel particulate emissions. there, the european laws are much stricter than the u.s. >> with this defeat device in 11 million vehicles, would it help deceive the european countries standards as well? i can only give you my understanding at this point of time, but there's lots of european countries investigating this and we are working with those agencies, also with the german kba, the responsible agency. this is being investigated. since the standards are different, my understanding is the defeat device is in those

cars as well, but to what degree it is affecting emissions laws, i don't know. >> i appreciate that answer. it is refreshing to hear my colleagues from the other side defend the clean air act and talk about emissions. it is a rare concurrence. i yield back. mr. collins recognized for five minutes. >> thank you, mr. chairman. last tom one of the question you, what i've picked up here and i hope you can , thee back to your board folks running volkswagen in germany, is that the response so far is inadequate. i would tell you, from my perspective, it is a sign of arrogance. it is a sign of not admitting the severity of your problem. i'm an engineer. i have a way of thinking. portrayalccept vw's

of this as something by a couple of rogue software engineers. i would begin by saying, isn't intellectual property a very important part of what makes vw vw? you're constantly looking for breakthrough technology that you can patent. that is a big part of your company. you pride yourself on that engineering. --you're having us believe this is the way an engineer's mind works -- back in 2009, you were trying to figure out a way to have clean diesel top performance and your engineers got stumped. the emissions were not even close. would that be true? mr. horn: stumped? >> confused, they couldn't get through it. insurmountable roadblock. they couldn't get performance and emissions control at the same time. mr. horn: seems to be logic, what you're saying.

i don't know. >> if i'm working in vw engineering and i'm looking for intellectual property that i can patent to give me a competitive advantage -- and i know this is a problem, and this was going way up the chain -- we can't do it. the standards in the u.s. are not what they need to the, we can't do it. go work harder. go find a solution. people are coming back. we still can't find a solution. all of a sudden, two software engineers like they found pixie dust come in and say, we found the solution. we fixed it. now you're telling me these two engineers snuck that computer code into the software and no one said this is breakthrough technology? i think we need to run this of the latter. we need to patent this. this is intellectual property. we can meet the standards and

the performance standards and we had a breakthrough. you're trying to -- vw is trying to get the united states to believe these are a couple of rogue engineers? i reject that. either your entire organization is incompetent when it comes to trying to come up with intellectual property, or they are complicit. at the highest levels. in a massive cover-up that continues today. just the five minutes that i've been here, my mind immediately jumped to, with this being true, why didn't we look for patents? why didn't we ask questions? this didn't happen in one day. this didn't happen in one month. your engineers

then all of a sudden, the solution is there. if that is true, your entire patent department should be terminated. this would have been massive breakthrough technology that would have given vw a true advantage in clean diesel technologies. i would like you to take that back to your board and have them ask that question. what was going on in the patent world? personally, i, categorically reject everything vw is saying about a couple of rogue engineers. suspending three folks, it goes way higher than that. what i would like to conclude with, again, i'm a financial guy, and entrepreneur. i would suggest you be honest to your shareholders. 6.5 billion euros is off by an

order of magnitude. 500,000 vehicles at $40,000 apiece, if you were to buy those back, that's 20 billion there. i would suggest you are off by an order of magnitude. you setold us today aside 68 billion, i would say you are in the ballpark. i yield back. >> i now recognize mr. welsh for five minutes. .> thank you very much sir, thank you for coming in. i want to express some of the things i've been hearing from vermont. vwve got vw customers, dealers in red states and blue states, and they are mad as hell. some of the questions that came to me from vermonters, i want to submit this to the record and ask you to answer these questions, but let me just give you a reflection of what these say.

number one, what will you be reading wenzhou rate in jail? number two, i wonder what you were thinking. three, how can we help vermonters who got these lemons? four, why should the u.s. allow you to sell vehicles in this country? is the lance armstrong of the industry. these questions go on and on. last question, how do you sleep at night when you knowingly poisoned the planet? vwalked to some of our dealers. they care about their customers. i know you do as well. one of the dealers said this is on the scale of enron and bernie made off. they will stand by their employees, our dealers, but this is going to be an expense to

them, because they are not selling cars that are bringing in profits. they have to pay out of their own pocket. they will do that because they are loyal to their employees. one major question. reached aweek, bp settlement with the justice department over the massive 2010 gulf oil spill that killed 11 workers and devastated the environment and the economy of the gulf coast. that settlement allowed bp to shift more than half of its $21 billion fine to the american taxpayer by taking advantage of a loophole in the u.s. tax code. in my view, that's wrong. the wrongdoer, not the taxpayer, should pay all of the settlement. today under oath that vw will not use this

loophole to write off any future settlement payments related to the fraudulent and deceptive activity to which vw has already admitted? mr. horn: if you want a clear answer under oath, i would have to understand these tax loopholes and i don't understand them. >> let me explain it simply. off about half of the cost of that, and that shifts the burden to the taxpayer instead of their shareholders. mr. horn: my understanding is that we will work very hard in order to get this right and this should not be a burden to the taxpayers. should not be. >> thank you. another question, i know you individually are appalled at what happened at vw.

you asked, how could it happen? someone somewhere made a decision to make it happen. someone somewhere implemented that decision. you've asked yourself how that happened, correct? mr. horn: yes sir. >> and your answer to yourself is what? mr. horn: my answer to myself is that i do everything -- and i don't sleep at night -- to help our dealers, to help our customers, and to be there for my company. >> i appreciate that. you have a very good reputation. but i asked another question. you know the company. you've asked yourself who and how. in your own mind, i'm asking you to share with us your own view about who and what -- how that could happen in the corporate structure of vw. mr. horn: i think this is

speculation. i'm reading newspapers as well. .here's been lots of articles from my personal feeling, this was pressure in the system to get resolutions. this was discussed already. wrong if you dead put corporate profits before people. first,e to put people not the corporate profit. >> what people, in what department -- my time is up. >> i recognize the gentleman from texas. >> thank you. mr. on, thank you for joining us in a tough situation for your company. vw's actions damaged the trust of the american people as well as the environment around the globe. they have also economically damaged their customers, dealers, and shareholders. i hope that vw will continue to

work on the correct and fair resolution of those issues. i want to get more in the weeds now to try and fill in the the who, some dates, what, where, when. in may of 2014, independent researchers published reports that identified higher-than-expected on road emissions of vehicles, which prompted investigations by carb and the epa. when did vw first become aware of this research? nd of april, when it was published. i got it mid-may. vw take tops did evaluate the conclusions of the research at that time? mr. horn: first of all, to acknowledge that higher emissions are not legal. secondly, the engineering

department were supposed to recheck those testing results on our own equipment to validate this. third, to correct this with the respective software actions which had been implemented last year. >> where was this done, volkswagen germany, or volkswagen u.s.? mr. horn: the software applications management for the engines and the exhaust systems are being done in germany. the engine and drive time department was the research and development division. bothe epa and carb described a series of presentations or discussions with vw in the wake of the research. who from vw was interacting with epa and carb? that is something i would have to check. maybe this is also the records provided to you next week. >> what did vw america

understand about the cause of the higher emissions? what did you and your team at vw america know was going on? mr. horn: that they had to my understanding validated those test results and are developing software fixes. versions,ifferent which i didn't understand to be very honest. also, as i said, all these things are vetted through this product safely committee, which is also looking at this. in this context, i trusted those guys and those processes, that every living -- that everything was according to the books. knew thatdy at vw there was cheating going on in

the software? mr. horn: to my knowledge, no. conducted a voluntary recall that sought to address the higher emissions in vehicles that were subject to the allegations. would you explain what you understand this recall was intended to do? correct the results of the study of the university of west virginia, testing to bring all the cars back into compliance. >> but that fixed to the emissions problems as part of that recall didn't resolve the issue. so the question is, who was responsible for developing that technical solution that was implemented in december of 2014? mr. horn: same engine and drivetrain division within the engineering and development department. >> the folks in germany, ok. int role did vw america have

developing or validating that solution? mr. horn: we just have this office in auburn hills. there's also testing facility in oxnard in california. we also have those folks testing. to my understanding, dino testing as far as the legal situation is concerned. vw americabe clear, played no part in developing the solution. it may have helped validate the solution. mr. horn: i don't think so. >> at that time, did you or anyone at vw america have any knowledge of the alleged defeat device? mr. horn: at which point of time? >> december 2014. did you have any knowledge? mr. horn: no. >> anybody in vw america? mr. horn: i would have hoped they would inform me of this. i now recognize mr. clark of

new york for five minutes. >> thank you, mr. chairman. i would like to thank you, mr. horn, for taking the time and giving us as much background and knowledge of what has taken place to the best of your ability. i've heard a couple of my colleagues refer to what has occurred as cheating. i will like to say to you that i believe it was intentional deception. i think we need to say it as it is. this wasn't a game. this was intentional deception to bring something on the market that did not meet standards. i want to go back to something my colleague raised about your testing center at oxnard. i understand that for the better part of the past year, vw was interacting with carb about discrepancies related to the

high emissions involving your vehicles. what is the purpose of the oxnard facility? is it developed to help volkswagen meet emissions standards? mr. horn: to my understanding, yes. it is directly connected to the research and development department in germany to get the cars into legal compliance. >> how many employees are there? mr. horn: i would have to guess this number. >> if you could provide us with that. what was the role of the oxnard facility in understanding the test results presented by carb showing unexpectedly high on road emissions? at this point of time, i can't answer this. i don't have the understanding. i only know our department in auburn hills was interfacing with carb and epa for the compliance, for the applications

and everything. >> you mentioned auburn hills. what is the role of that office? the compliance and the application for certification with the u.s. authorities, and work on a management level on a daily basis with epa and carb. >> do the oxnard and auburn hills facilities work together? now?orn: yes. there's a structural change. >> prior to the unveiling of this deception, they were separate entities? mr. horn: i think they worked together. my explanation is about the structural situation of these facilities. >> but they collaborate. mr. horn: i hope so. >> my concern is that, if we have these facilities designed

specifically to address the testing, emissions, of and they failed, that speaks to a whole other level of perhaps collusion with respect to this whole software debacle. have you looked at or done any internal investigation with respect to these facilities? mr. horn: that's part of the internal investigation. my understanding is they are just testing on the basis of the legal test requirements. >> so the engineers would not have known software code? mr. horn: i think they have tested the dino situation for the cars and didn't do independent protests. >> ok. idea ofump to the whole the environmental impact.