VW diesel scandal grows to 11 million cars

THE Volkswagen diesel emissions scandal has spread beyond the United States, with the company overnight admitting that 11 million vehicles are affected worldwide and that it has set aside 6.5 billion Euros ($A10.2b) in preparation for the fallout.

This development follows the 482,000 VW Group vehicles sold in the US that environmental authorities found only activated full emissions controls under test conditions, while emitting much higher levels of harmful NOx (oxides of nitrogen) in the real world.

VW Group’s own investigations have found that products from the Audi, Seat, Skoda and Volkswagen brands sold worldwide fitted with EA189 four-cylinder turbo-diesel engines are affected by software that can detect if the vehicle is undergoing a government emissions test cycle in order to cheat the system.

At this stage, neither Audi Australia nor Volkswagen Group Australia has information about whether any locally delivered vehicles are affected.

Australian emissions standards are less strict than those in the US and Europe, meaning cars in this country could be among the “the majority of these engines (in which) the software does not have any effect”, mentioned in a statement issued by Volkswagen AG overnight.

“Volkswagen is working intensely to eliminate these deviations through technical measures,” says the statement.

These measures may include a recall or compensation to affected customers. VW says the 6.5 billion Euros it has set aside is “to cover the necessary service measures and other efforts to win back the trust of our customers”, but has not ruled out this amount ballooning.

Its statement reads: “Due to the ongoing investigations the amounts estimated may be subject to revaluation.”

Volkswagen Group CEO Martin Winterkorn also issued a video statement overnight admitting that the company does not yet have “all the answers to all the questions”.

One of those questions is over Dr Winterkorn’s future with the VW Group, as European media is rife with rumours that the scandal has cost him his job, just weeks after it was announced that his contract would be extended until the end of 2018 following a power struggle with former chairman Ferdinand Piech in April that resulted in Dr Piech’s resignation.

Echoing the statement’s line that “Volkswagen does not tolerate any kind of violation of laws whatsoever,” Dr Winterkorn said “the irregularities that have been found in our Group's diesel engines go against everything Volkswagen stands for”.

Understanding the damage the deceitful nature of the scandal will bring to the brand, Dr Winterkorn pleaded for suspicion to not be cast on all 600,000 people employed by VW group “because of the mistakes made by only a few”.

“I would like to make a formal apology to our customers, to the authorities and to the general public for this misconduct,” he said.

“We will do everything necessary to reverse the damage. And we will do everything necessary to win back trust – step by step … We will get to the bottom of this.

“We are working very hard on the necessary technical solutions. And we will do everything we can to avert damage to our customers and employees. I give you my word: we will do all of this with the greatest possible openness and transparency.”

In the US, VW faces a maximum fine of $US37,500 ($A53,200) per offending vehicle and could also be dragged through criminal proceedings and class action litigation.

Dealers have been told not to sell 2015 model year diesel models from stock and VW will not receive compliance certificates for MY2016 vehicles.

The scandal has severe financial ramifications for VW Group, its share price having dropped 19 per cent on Monday and a further 20 per cent yesterday.

A number of European countries and South Korea have reportedly been prompted to investigate whether VW Group products and those from other manufacturers have been rigged to cheat their official emissions tests.

However the VW Group statement assures customers and dealers that “EU 6 diesel engines currently available in the European Union comply with legal requirements and environmental standards”.

“The software in question does not affect handling, consumption or emissions,” it says.