Volkswagen on Tuesday said it had understated the fuel consumption of 800,000 cars sold in Europe, while majority stakeholder Porsche Automobil Holding SE warned that VW's latest findings could further weigh on its results. (Reuters)
Volkswagen on Tuesday said it had understated the fuel consumption of 800,000 cars sold in Europe, while majority stakeholder Porsche Automobil Holding SE warned that VW's latest findings could further weigh on its results.
The latest revelation about fuel economy and carbon dioxide emissions, which Germany's largest automaker said represented a roughly 2 billion euro ($2.19 billion) economic risk, deepened the crisis at VW.
The scandal initially centered on software on up to 11 million diesel vehicles worldwide that VW admitted vastly understated their actual emissions of smog-causing pollutant nitrogen oxide.
U.S. environmental regulators said on Monday that similar "defeat devices" were installed on larger 3.0 liter engines used in luxury sport utility vehicles from Porsche and Audi, although VW has denied those allegations.
Porsche's North American unit said it was discontinuing sales of Porsche Cayenne diesel sport utility vehicles until further notice, citing the allegations.
The latest findings that VW understated fuel consumption and carbon dioxide emissions, areas which U.S. regulators have yet to address, were disclosed as VW continues a broad review of its handling of all pollution-related issues.
"VW is leaving us all speechless," said Arndt Ellinghorst of banking advisory firm Evercore ISI. "It seems to us that this is another issue triggered by VW's internal investigation and potentially related to Europe."
The carmaker said it would immediately start talking to "responsible authorities" about what to do about the latest findings.
"From the very start I have pushed hard for the relentless and comprehensive clarification of events," Volkswagen Chief Executive Matthias Mueller said in a statement. "We will stop at nothing and nobody. This is a painful process but it is our only alternative."
Porsche, which last month had already cut its outlook as a result of the scandal, said it was sticking with its current forecast for post-tax profit of between 0.8 and 1.8 billion euros. But it said the forecast could still change and was dependent on VW meeting its own current profit forecasts.
The biggest business crisis in VW's 78-year history has wiped as much as a third off its stock market value, forced out long-time CEO Martin Winterkorn and rocked the auto industry, a key employer and source of export income in Germany.
"Volkswagen has done a disservice to German industry," Ulrich Grillo, the head of the Federation of German industries, told a conference on Tuesday, adding the firm had an obligation to the whole industry to clear up the scandal quickly.
German Chancellor Angela Merkel and the European Commission, the European Union's executive body, called for clarity and transparency to clean up the scandal.
VW's supervisory board said it is "deeply concerned by the discovery of the irregularities" involving CO2 levels, and will meet in the "very near future" on the issue.
The company took a 6.7 billion euro hit in third-quarter results to cover initial costs related to the scandal. Some analysts have said the final bill could reach as much as 35 billion euros in regulatory fines, lawsuits and vehicle refits.
VW shares fell 1.5 percent to close at 111 euros. The VW statement about under-reporting fuel economy came out after the Frankfurt market had closed.
VW is under huge pressure to identify those responsible for the cheating and fix affected vehicles, and it has come under fire from lawmakers, investors and analysts for a slow response.
Some analysts and investors criticised the appointment of Mueller as group CEO, questioning whether a company veteran was the right man to lead an overhaul of the business.
Top players on VW's supervisory board, including the head of Lower Saxony, VW's second-largest shareholder, are in close contact with the carmaker and seeking information from its top management on the latest accusations by EPA, two sources familiar with the matter said on Tuesday.
VW was the only brand of Germany's top carmakers to post lower sales in a growing German market in October, the Federal Motor Transport Authority (KBA) said on Tuesday. New registrations of the VW brand fell 0.7 percent while BMW, Porsche, Opel and Mercedes all reported higher deliveries in a market that was up 1 percent to 278,000 cars.
Audi said on Tuesday it had not installed defeat devices in its 3-liter V6 diesel engines and is aiming to meet with California regulators in the next week to explain its position as well as how the software works. Seeking belated authorization of the software could be one option to try to solve the matter, the spokesman said.
"It would cause the biggest possible shock to VW if those accusations are true," said Stefan Bratzel, head of the Center of Automotive Management think-tank near Cologne.
"VW keeps touting utmost transparency but they really should have put all the cards on the table. There is a lot of need for explanation, from Audi too."
Rival German carmaker BMW reiterated on Tuesday it had not manipulated emissions tests, as it posted a surprise rise in third-quarter operating profit.