Volkswagen Details Brands Affected by Emissions Scandal

Volkswagen AG has admitted using piece of engine software to cheat on diesel car emissions tests in U.S.; up to 11 million vehicles worldwide fitted with engine in question.

Andreas Cremer
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A Greenpeace activist holds a protest poster in front of a Volkswagen factory in Wolfsburg, Germany, September 25, 2015.Credit: AP
Andreas Cremer

REUTERS - Senior Volkswagen executives will examine on Wednesday findings from an internal investigation into its rigging of vehicle emission tests and prepare for an external inquiry, a source familiar with the matter told Reuters. 

The executive committee of the German carmaker's supervisory board will gather on Wednesday evening at its Wolfsburg headquarters to assess the initial results of the internal inquiry into the biggest business-related scandal of its 78-year history, said the source, speaking on condition of anonymity. 

A representative of U.S. law firm Jones Day, which is expected to lead the external investigation, will attend part of Wednesday's meeting, the source added. 

Europe's largest carmaker has admitted cheating in diesel emissions tests in the United States. Germany's transport minister says it also manipulated tests in Europe, where Volkswagen sells about 40 percent of its vehicles. 

It is under huge pressure to come to grips with a crisis that has wiped more than a third off its market value, sent shock waves through the global auto industry and could damage Germany's economy. 

New Chief Executive Matthias Mueller, who took over from Martin Winterkorn last Friday, has promised to punish those responsible and to create a new business culture. 

Winterkorn, CEO for almost nine years, is being investigated by German prosecutors over allegations of fraud. 

Investors view an external probe as particularly important, given the close links of Mueller and chairman-designate Hans Dieter Poetsch to the Piech-Porsche clan that controls the carmaker. 

Influential German newspaper Handelsblatt reported on Wednesday that some investors were calling for Poetsch to stand aside. However, a source close to the Piech and Porsche families told Reuters they strongly supported Poetsch becoming chairman. 

Shareholder advisory firm Hermes EOS said on Monday it had "real doubts" about Volkswagen's decision to appoint company insiders to top jobs to tackle the crisis. 

Management focus 

Volkswagen said on Tuesday it would refit up to 11 million vehicles installed with the "cheat" software in one of the biggest such recalls by a single automaker. 

It has promised to submit details to regulators next month, with customers anxious to know whether the mileage and efficiency of their vehicles will be affected. 

The carmaker's Czech division Skoda has informed the government there that it will need until the end of October to find a technical solution to the problem. Around 1.2 million Skoda vehicles are affected. 

Manipulating emissions results allowed Volkswagen to keep down engine costs in a "clean diesel" strategy that was popular in Europe and at the heart of a drive to improve U.S. results. 

The source familiar with the matter told Reuters an engineer questioned in the company's internal probe had warned of illegal practices in emissions measurement as far back as 2011, but that no action was taken. 

On top of its own inquiries, Volkswagen faces investigations by regulators and prosecutors across the world, plus potential lawsuits from customers, investors and environmentalists. 

Some analysts are concerned that management will be so preoccupied with the crisis that they will not have enough time to focus on rebuilding the brand and tackling long-standing areas of underperformance, such as the mass-market VW division, flagging sales in China and a struggling U.S. business. 

In a sign of the potential impact of the scandal, a car valuation tracking guide on Wednesday said the value of used Volkswagen diesel cars sold in Britain trailed the wider market in September. 

Industry publication Green Car Journal also said on Tuesday it was rescinding "Green Car of the Year" awards given to Volkswagen's 2009 VW Jetta TDI and 2010 Audi A3 TDI models. 

However, Skoda said it had not seen any impact on sales or orders since the crisis erupted, and analysts said a halving in sales tax on small cars in China could provide a boost to Volkswagen. 

At 9:20 GMT, Volkswagen shares were up 2.7 percent at 97.75 euros. 

The company's troubles have been an embarrassment for Germany, which has for years held up Volkswagen as a model of its engineering prowess and has lobbied against some tighter regulations on automakers. The German car industry employs more than 750,000 people and is a major source of export income. 

German Finance Minister Wolfgang Schaeuble said on Wednesday the crisis did not pose a danger to the country's economy, Europe's largest, but added: "In the end, VW will not be the same company it once was. A lot will change from a structural perspective." 

Car manufacturers are worried the crisis could lead to more costly regulations and hit sales of diesel cars.