Volkswagen Chief Suggests Ending Subsidies for Diesel Cars

Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen who has frequently been critical of Volkswagen, said that “if there was a Nobel Prize for company bosses, Müller would earn it.”

Mr. Müller stopped short of calling for a quick end to the subsidies, and he may have just been acknowledging reality. Until last year, more than half of all cars sold in Europe were diesels, which were marketed as being not only economical but also environmentally friendly.

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Matthias Müller, Volkswagen’s chief executive. He said on Sunday that the German government should consider phasing out subsidies that encourage Europeans to buy diesel cars.

Credit
Fabrizio Costantini for The New York Times

But diesel began to lose popularity after studies by the governments of France, Germany and Britain showed that the diesel cars from almost all manufacturers polluted much more than advertised. Though only Volkswagen has been accused of criminal behavior, many others exploited weak enforcement and loopholes in regulations. As a result, European cities like Madrid or Athens often have unhealthy levels of nitrogen oxides, which can cause asthma and lung cancer.

The decline in diesel’s market share has accelerated this year after cities like London, concerned about nitrogen oxide pollution, began taking steps to keep diesels out of city centers. Diesel vehicles produce far more nitrogen oxides than their gasoline-powered counterparts.

In another break from his peers, Mr. Müller said on Sunday that he was in favor of banning older diesels from city centers. But he said such restrictions should not apply to newer diesels that meet stricter standards on nitrogen oxide emissions.

Previously, Mr. Müller and the chief executives of BMW and Daimler insisted that diesel engines with the latest antipollution equipment were clean and that the technology still had a future.

An end to diesel subsidies could fall particularly hard on BMW and Daimler because they would have trouble selling large, profitable luxury cars without the fuel economy benefits offered by diesel. Volkswagen has recently begun converting one of its German factories to produce electric cars, vowing to be the company that will make battery-powered vehicles practical and affordable for the masses.

Germany and most other countries in Europe tax diesel fuel at a lower rate than gasoline, providing a powerful incentive for consumers in a region where gasoline costs $6 a gallon or more. The subsidy was based on the theory that diesel cars burn fuel more efficiently than gasoline and thus contribute less to global warming.

Diesel has been fundamental to the success of German carmakers. Volkswagen was among the first manufacturers to offer affordable diesel passenger cars that did not smoke and rattle, and parlayed its technical advantage into dominance of the European car market.

If diesel were taxed at the same rate as gasoline, Professor Dudenhöffer said, the German government would collect 8 billion euros, or $9.4 billion, more in revenue.

“Diesel is not the future, it’s the past,” he said. “It makes no sense to spend billions of tax money on the technology.”

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