Embattled VW sinks deeper into mire of emissions-cheating scandal

4th November 2015, Comments 0 comments

Shares in Volkswagen took a renewed battering Wednesday as evidence emerged that the massive pollution cheating scandal engulfing the company could be even wider than initially thought.

VW's shares were once again the biggest losers on the Frankfurt stock exchange, slumping more than 10 percent in early trade after the company said that it had uncovered new anomalies, this time in the carbon emission specifications of engines in as many as 800,000 vehicles.

By afternoon, the shares had come off their lows to show a loss of 8.38 percent at 101.70 euros.

If confirmed, however, the irregularities could have serious financial consequences for VW, already facing tens of billions of euros in potential fines and lawsuits.

A car tax is levied in Germany depending on how pollutant a vehicle is.

Transport Minister Alexander Dobrindt said that customers should not be expected to have to pay the higher tax if VW had deliberately understated the vehicles' CO2 emissions.

"We see it as VW's duty to ensure that customers face no additional costs," Dobrindt said on the n-tv news channel.

- 'Litany of lies' -

VW has lost nearly 40 percent in market capitalisation since September when the initial cheating revelations broke.

Until now, the scandal had centred on so-called defeat devices, sophisticated software fitted into diesel engines to skew the results of tests for nitrogen oxide emissions.

But late Tuesday, the auto giant said that an internal probe had uncovered "inconsistencies" on carbon emissions as well. And these might not only affect diesel engines, but perhaps petrol engines, too.

"When will this litany of lies end," asked Greenpeace campaigner Daniel Moser.

"Volkswagen is not only risking public health by cheating on nitrogen oxide emissions standards, the 'irregularities' in the CO2 emissions also show how the company is complicit in and profiting from climate change," Moser said, calling on governments and regulators to "end this continued deception and ensure Volkswagen upholds emissions standards."

Volkswagen has found itself at the centre of a worldwide storm and the object of both regulatory and criminal investigations in a range of countries since mid-September when it admitted to fitting 11 million of its diesel vehicles with defeat devices.

These turn on pollution controls when cars are undergoing tests and off when they are back on the road, allowing them to spew out harmful levels of nitrogen oxide.

Initially, the allegations involved smaller 1.2, 1.6 and 2.0-litre diesel engines.

But on Wednesday, the US accused the carmaker of fitting the devices on its larger 3.0 litre diesel vehicles, as well, charges VW adamantly denied.

The US authorities said VW's high-end brands, Audi and Porsche, were also implicated.

With regard to the possible cheating on its carbon emissions, a VW spokesman said that the 1.4, 1.6 and 2.0 litre motors of VW, Skoda, Audi and Seat vehicles are affected and these cars had been found to be releasing more of greenhouse gas CO2 than previous tests had shown.

At least one petrol (US: gasoline) engine is concerned, the company said.

In Berlin, Chancellor Angela Merkel's spokesman said the government "believes the accusations are serious and that Volkswagen has a duty to transparently and fully clear them up. Volkswagen has made this promise."

- 'Painful process' -

Chief executive Matthias Mueller, who was parachuted in last month to steer VW out of the current crisis, said the company would "stop at nothing in clarifying the circumstances."

But the inclusion of Porsche vehicles among those alleged to contain defeat devices could trip up Mueller, who was drafted in from the luxury sports car unit to replace Martin Winterkorn, who resigned at the height of the scandal.

VW, the world's number two carmaker by sales, had swiftly denied the new US charges, but vowed to "cooperate fully with the EPA (to) clarify this matter in its entirety."

Audi and Porsche similarly denied the allegations.

For Ferdinand Dudenhoeffer, auto expert at the University of Duisburg-Essen, "any trust still left in the company has now completely evaporated."

He suggested the potential costs of the scandal would be at least 50 billion euros.

- Financial burden -

The scandal is already hurting the finances of both VW and the holding company Porsche SE, which holds a stake of 32.4 percent in the carmaker.

Last week, VW booked its first quarterly loss in more than 15 years as it set aside 6.7 billion euros to cover the initial costs of the scandal.

Separately, Porsche SE said Tuesday's revelations could have a "negative impact" on its own results, although it maintained its projections for 2015.

The holding company Porsche SE is controlled by the Piech and Porsche families who inherited the Volkswagen empire built by Ferdinand Porsche.


© 2015 AFP

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