Shares in Volkswagen continued to tumble on Tuesday, as the scale of the crisis facing the German auto major became apparent as it issued a profit warning for the third quarter, and admitted that up to 11 million cars globally were impacted.
Shares were down over 17 per cent in afternoon trade in Frankfurt, a day after they fell 17 per cent, following Friday’s admission by the company that it had rigged the emissions tests of nearly half-a-million Audi and Volkswagen diesel cars in the US using so-called “defeat devices”.
Now, the company says that as many as 11 million cars with the EA 189 diesel engines globally have “discrepancies” between their emissions during tests and the actual road use. “Volkswagen is working intensely to eliminate these deviations through technical measures,” it said in a statement.
The company has put aside €6.5 billion to deal with the crisis, but the amount could be revisited because of ongoing investigations, it said.
Volkswagen faces civil penalties of up to $18 billion for using a complex software algorithm to detect when its diesel cars were involved in a test, and only then switching full emission controls on.
Over four lakh cars in the US are impacted, and the company could be fined as much as $37,500 for each by the US Environmental Protection Agency. In addition to civil penalties, the company could also face criminal proceedings as well as civil litigation on behalf of consumers.
On Monday, Volkswagen’s head of US operations Michael Horn said the company had “totally screwed up.” While authorities across the world have announced plans to test Volkswagen diesel vehicles — including South Korea, Italy and Germany — there are calls for sharper scrutiny of the industry more widely and for more rigorous standards to be introduced in Europe. French Finance Minister Michel Sapin told radio station Europe 1 that a Europe-wide investigation had to be conducted.
Jos Dings, director of the campaign group Transport & Environment, said he hoped the revelations would help the push for a tougher European testing regime, and a region-wide standards monitoring agency for vehicles.
Updated methods Even within the industry there is a recognition that testing methods need to be updated.
In a statement, Mike Hawes, CEO of the UK’s Society of Motor Manufacturers and Traders, described the current test method as “outdated” and said the organisation was seeking an agreement from the European Commission for new emission tests that used new technologies and were “more representative of on-road conditions”.
In Europe, diesel cars accounted for 54 per cent of registrations last year against less than one per cent in the US.
Some have argued that the VW debacle could lead to further revelations about the rest of the car industry, that could turn it into the equivalent of the banking industry’s LIBOR scandal.