VW Dropped From Trusted-Cargo Program Over Cheating Scandal

Ryan Beene

More stories by Ryan Beene

Updated on

U.S. Customs drops automaker from program on cargo security
Automaker faces added delays, costs to import cars into U.S.

The emissions-cheating scandal that has cost Volkswagen AG more than $20 billion has also made it harder to import its cars to the U.S.

Violations uncovered by the investigation into VW’s emissions cheating prompted U.S. officials in 2016 to remove the company from a trusted-cargo program overseen by U.S. Customs and Border Protection, said Nicole Navas, a Justice Department spokeswoman.

As a result, VW vehicles and engines imported to the U.S. face a greater risk of lengthy delays at border crossings.

The program, called the Customs-Trade Partnership Against Terrorism, offers perks to companies such as front-of-line inspections and fewer searches in exchange for agreeing to bolster the security of their cargo and supply chains. Some 11,400 firms participate.

The removal means that VW must seek readmission to rejoin the program, Navas said on Wednesday, confirming for the first time that the company had been removed from the program in March.

VW imports the vast majority of the vehicles it sells in the U.S. market. Only 13 percent of its unit sales were from U.S.-assembled goods, ranking it second-to-last among carmakers, according to a report by Brian Johnson of Barclays. Only Mazda had a lower percentage.

VW of America spokeswoman Jeannine Ginivan declined to comment on the company’s removal from the program.

VW AG on Wednesday agreed to pay $4.3 billion and pleaded guilty to U.S. criminal charges tied to its emissions cheating, including the use of false statements to import cars to the U.S. That brings to more than $23 billion the amount the company has committed to paying in U.S. and Canadian civil and criminal settlements.

“Volkswagen deeply regrets the behavior that gave rise to the diesel crisis,” Chief Executive Officer Matthias Mueller said in a statement. “We will continue to press forward with changes to our way of thinking and working.”

Porsche Cars North America spokesman Christian Koenig said the company is a “completely separate” importer from the VW Group of America and is unaffected by the VW Group’s removal. Porsche is “extremely honored to have top-tier status under the C-TPAT program, has worked very hard to earn and keep it,” he said.

A spokesman for Audi of America declined to comment. Porsche and Audi are owned by VW.