Bug in Volkswagen emissions

September 21, 2015 09:42 AM

Volkswagen shares plunged more than 20% on Monday, their biggest ever one-day fall, after news the German carmaker had rigged U.S. emissions tests, and Germany said it would investigate whether data had been falsified in Europe too.

The U.S. Environmental Protection Agency said on Friday Europe's biggest carmaker used software for diesel VW and Audi branded cars that deceived regulators measuring toxic emissions and could face penalties of up to $18 billion.

Germany's Economy Minister Sigmar Gabriel expressed concern over the impact of what he called "a bad case" on the country's vital auto industry and he urged Volkswagen to fully clear up the allegations.

"You will understand that we are worried that the justifiably excellent reputation of the German car industry and in particular that of Volkswagen suffers," Gabriel said.

Germany's transport minister will meet Volkswagen Chief Executive Martin Winterkorn later on Monday, two government sources said, without providing further details. Earlier, the government said it would conduct checks on whether emissions data had been manipulated in Germany and in Europe too.

Winterkorn said on Sunday he was "deeply sorry" for the breach of U.S. rules and ordered an external investigation. Some said he may now have to resign.

"This disaster is beyond all expectations," said Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen.

Analysts said it was unclear whether other automakers had also broken rules or what the ultimate cost could be for VW.

German rivals Daimler and BMW said the accusations made by U.S. authorities against VW did not apply to them.

However, industry experts predicted the scandal would hit VW hard, just as it was hoping to move on from a damaging leadership battle, with a supervisory board meeting on Friday due to discuss a new company structure and management line-up.

Winterkorn, who recently saw off a challenge to his authority with the ousting of long-time chairman Ferdinand Piech, ran the VW brand between 2007 and 2015, including the six-year period when some of its models were found violating U.S. clean air rules.

Evidence of increased toxic emissions at VW first emerged in 2014, prompting the Californian Air Resources Board (CARB) to start investigating VW, a letter by CARB to VW dated Sept. 18 showed.

CARB told VW in July that its own testing of vehicles still showed excessive nitrous emissions, leading VW to admit on Sept. 3 that it had used the "defeat device" to bypass control rules.

A source close to Volkswagen said any decision on emissions control mechanisms would have been taken at the group's Wolfsburg headquarters and not by regional divisions.

The way carmakers test vehicles has been coming under growing scrutiny from regulators amid complaints from environmental groups that they use loopholes in the rules to exaggerate fuel-saving and emissions results.

Page 1 of 2
About the Author