The Volkswagen pollution cheating scandal escalated dramatically today when the automaker revealed 11 million of its cars worldwide could be affected, wiping a third off the company’s market value and threatening to topple its chief executive.
The United States has opened a criminal investigation into Volkswagen, a source close to the probe told AFP.
And authorities from France to South Korea also said they would investigate, prompting Volkswagen to announce that it was setting aside 6.5 billion euros (USD 7.3 billion) in provisions for the third quarter to cover the potential costs of the scandal.
VW shares, which dived 17 per cent yesterday, plunged by another 23 per cent to a low of 101.30 euros during trade on the Frankfurt stock exchange as the automaker’s new revelations, including a warning that it will have to lower its profit outlook, sent investors fleeing.
When the manipulation of pollution tests was first publically revealed on Friday, the US authorities said it concerned nearly half a million diesel vehicles in the United States manufactured by the Volkswagen group.
“Further internal investigations have shown that the software concerned is also installed in other diesel vehicles,” VW said in a statement.
“Anomalies have shown up in around 11 million cars worldwide that are equipped with a specific engine type,” added the car manufacturer, the world’s biggest by sales in the first half of this year.
“In order to cover the necessary service and other measures to win back customer confidence, VW plans to set aside 6.5 billion euros in provisions in the third quarter. The group’s earnings targets for 2015 will be adjusted accordingly.”
The impact on the reputation of Volkswagen and other carmakers is hard to measure.
German Chancellor Angela Merkel called on the VW to show “full transparency” to clear up the matter. “I hope the facts will come to light as soon as possible,” she told reporters in Berlin.
Industry experts say VW chief executive Martin Winterkorn’s job is on the line. He was due to give a video statement later today.
The regional daily Tagesspiegel said his dismissal had already been decided by the steering committee of car maker’s supervisory board and would be officially sealed at a meeting of the full 20-member board this Friday.
US regulators have ordered Volkswagen to fix the defective vehicles and launched an investigation.
The German firm has halted all diesel vehicle sales in the United States during the US probe, which could lead to fines amounting to a maximum of more than USD 18 billion.