Volkswagen emissions scandal woes grow as company faces global scrutiny

In the wake of its massive emissions scandal, Volkswagen has suffered huge losses but avoided US fines – for now. Will their luck hold as other countries launch their own investigations?

Pawel Kopczynski/Reuters/File
The logo of Volkswagen is pictured during a media preview day at the Frankfurt Motor Show (IAA), Germany, September 10, 2013. EU regulators said on Tuesday they are in contact with Volkswagen AG and US authorities following the car-makers' admission it had rigged emissions tests, and called on member states to rigorously enforce the relevant law.

After Volkswagen apologized on Sunday for fitting 11 million vehicles with software meant to fool emissions testers, generating a race to sell shares that lost the company 25 billion euros (almost $28 billion US), governments around the world resolved to launch their own investigations.

The company scrambled to recover from international fallout that began last Friday when the US Environmental Protection Agency announced that Volkswagen had installed so-called “Defeat Devices” on several diesel engine models between 2009 and 2015. The devices keep cars in a ‘greener’ emissions mode while undergoing emissions tests, then automatically switch into much more polluting mode once cars are actually on the road: up to 40 times the US legal limit. Some 500,000 vehicles had the software installed for the US market, but up to 11 million may be affected worldwide.

As the company’s stock prices fell to a four-year low, it said Tuesday that it would dedicate 6.5 billion euros (over $7 billion US) to remedy the problem and “to win back the trust of our customers.”

So far, the EPA has not levied a fine on the company, although it has said it has the right to charge them $18 billion. But other countries may not be so forgiving.

In Volkswagen’s native Germany, where its diesel cars will be subject to new tests, Chancellor Angela Merkel called for “full transparency,” demanding that “the facts ... be put on the table as quickly as possible.” Elsewhere in Europe, France called for European nations to cooperate on an investigation, saying that French carmakers would also be held up to scrutiny. Britain's Transport Secretary Patrick McLoughlin seconded the call for a European Commission report. South Korea also promised to investigate.

The EPA’s study focused on Type EA 189 engines, and Volkswagen has admitted that the same deceptive software is programmed in other diesel vehicles, as well. However, they claim that the “defeat device” “does not have any effect” on other engines.

The scandal comes at a particularly bad time for Volkswagen’s European markets: the European Parliament will vote in October on lowering its air pollution caps by 70% before 2030.

“I personally am deeply sorry that we have broken the trust of our customers and the public,” Martin Winterkorn, Volkswagon's chief executive, said in a statement on Sunday.

Mr. Winterkorn took the helm in 2007, and was scheduled to hold his post until 2018. It remains unclear if that plan will proceed.

This report includes material from the Associated Press and Reuters.

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