It's an astonishing story. Here's my take on it...
Back in 2008 I wanted to buy a small premium diesel to be my "working" car. Something not too big to take me to the office and to business meetings with the occasional passenger. Economical, but not monk-spec. A bit of luxury, but not bling. Fun to drive, but not a sports car. A responsible classy set of wheels for a manager with an environmental conscience. A car that said "Hey, I'm successful but mature and modest with it."
So I take a wander into the showrooms.
Mercedes wanted to sell me the mumsy (then) A class or B class. Great for taking kids to school, but for a bloke in his late 40s? Nope. I would constantly feel that I was auditioning for a remake of Mrs Doubtfire.
Mini wanted me to sit behind a comedy retro-pastiche dash that seemed to be trying too hard to be yoof.
A VW golf was just too dull.
An Alfa Romeo was Italian seductive with dials marked "aqua" and "benzina", but the switchgear felt like it was made out of bendy straws. I couldn't see it lasting the test drive, let alone a few years of hard miles.
Honda gave me the choice of the granny-tastic Jazz or the Darth Vader helmet Civic. But despite already having a Honda in the family (the simply wonderful FR-V), neither appealed.
That left the Audi A3 and the BMW 1 series. And that is when I discovered something very odd. The BMW 4 cylinder turbodiesel engine was faster, more powerful, more economical and less polluting than its VAG counterpart. That puzzled me so much that I compared engine by engine between the two cars, and it was the same story at every price point. I could understand it if one engine was more economical and less powerful or vice versa. But I couldn't see how the BMW engine was better in every department.
Looking back at it now, it didn't occur to me that BMW might have cheated. Surely they wouldn't do that?!
I bought the BMW, helped by the fact that it went round corners when I turned the wheel, where the Audi A3 felt like it was being steered by committee. Once you get past the image problem with the BMW badge, its turbodiesel engines were markedly better.
VAG must have been losing so many diesel sales back then. Spec for spec, their engines just were not as good as the competition. So what did they do? Eventually they managed to engineer a solution and their modern TDIs are supposedly much better. But back in 2008/ 2009 they needed a quick fix. So they decide to fit a software defeat device to cheat the emissions tests. At some point, a group of men (probably) in grey suits sat around a meeting room table and decided to lie to their customers. Our engines aren't as good as our competitors - so we'll cheat.
Unless, of course it turns out that BMW were also cheating and VAG were simply catching up. Now that would be a pain in the proverbial.