VW test scandal spreads to Europe

Volkswagen rigged emission tests on 2.8m diesel vehicles in Germany, the country’s transport minister, Alexander Dobrindt, said yesterday, six times as many as it has admitted to falsifying in the US.

His comments, pointing to cheating on a bigger scale than previously thought, deepened the crisis at the world’s largest automaker, as its supervisory board held a crucial meeting. 

The board is expected to name Matthias Mueller, the head of its Porsche sports-car division, as chief executive to replace Martin Winterkorn, who quit on Wednesday. At least four senior executives are expected to be purged.

Shares in the German company, which had started to steady after sharp falls earlier this week, were down 4.5% yesterday afternoon, after Bloomberg also reported that executives in Germany controlled aspects of the manipulated US tests.

Volkswagen is under heavy pressure to show it can get to grips with the biggest business-related scandal in its 78-year history. Mueller, 62, represents the fresh start that Winterkorn said was needed when he stepped down.

The board will also dismiss the head of its US business, the top engineers of its luxury Audi and Porsche brands, and the head of brand development at its VW division, to show it is decisively ending the crisis.

Volkswagen shares have plunged as much as 40%, wiping tens of billions of euros off its market value, since US regulators said last Friday it had admitted to programming diesel cars to detect when they were being tested, and altering the running of their engines to conceal their true emissions.

The scandal keeps growing. Dobrindt said on Thursday that Volkswagen had also cheated tests in Europe, where its sales are much higher, including the 2.8m vehicles affected in Germany.

Regulators and prosecutors across the world are investigating the scandal. 

The wider car market has been rocked, with manufacturers fearing a drop in sales of diesel cars and tighter regulations, while customers and motor dealers are furious that Volkswagen has yet to say whether it will have to recall any cars.

“VW needs to be very open about what has happened, how it was possible that this could happen, to make sure that this never happens again in the future,” said a leading Volkswagen shareholder, underlining the importance of the board meeting.

“These are priorities that should override all other considerations at the moment.”

The task facing Mueller, if his selection is confirmed, is huge. The company said on Tuesday that 11m vehicles worldwide were fitted with the software that allowed it to cheat US tests, while adding it was not turned on in the bulk of them.

Reuters


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