Volkswagen Scandal to Claim Further Scalps Amid Probe Into Firm's Dishonesty

Published: 25th September 2015 08:21 AM  |   Last Updated: 25th September 2015 08:21 AM   |  A+A-


The logo of a Volkswagen dealership is pictured in Pasadena, California September 21, 2015. | Reuters

LONDON: The crisis engulfing disgraced car giant Volkswagen deepened yesterday (Thursday) as news emerged of the extent of the company's knowledge about the emissions-rigging scandal and further top executives faced the axe.

Audi research and development boss Ulrich Hackenberg, Porsche's Wolfgang Hatz and VW's US chief executive Michael Horn, who admitted "we totally screwed up", were reported to be in line to lose their jobs at a meeting of the supervisory board today.

The stricken car maker is under pressure to repair its bruised reputation by both the German government and its own shareholders. The economy and transport minister of VW's home state, Lower-Saxony - which owns about 20pc of VW - said those responsible for allowing the manipulation must be held to account.

News also emerged that VW knew about the device cheat in the US and tried to cover it up last year, after American regulators started investigating.

In April, Volkswagen America is understood to have sent letters to California owners of diesel-powered Audis and Volkswagens, asking them to bring their cars into a dealership for a software upgrade. What VW failed to explain, was that the letters were part of a recall meant to satisfy government regulators, who were looking into discrepancies between laboratory emissions test results and pollution levels emitted by the cars under normal use. At the time, VW insisted the problem was only a technical glitch.

VW has already admitted that 11m of its cars globally might contain the so-called "defeat" devices, which cheat emissions tests by detecting when a car is being tested and forcing the engine to emit fewer harmful gases.

The German government, meanwhile, revealed that the secret "defeat devices" were built into the company's cars in Europe as well as in the US. It is not yet clear if it helped cheat emissions tests, as was the case in the US.

German Transport Minister Alexander Dobrindt said: "We have been informed that also in Europe, vehicles with 1.6 and 2.0 litre diesel engines are affected by the manipulations that are being talked about."

VW has set aside euros 6.5bn to help cover the costs of any fallout from the crisis, including a recall, but industry experts and analysts believe this figure will need to be much higher as governments around the world launch investigations into the scandal.

German public prosecutors are conducting a preliminary criminal inquiry into the company, while the US Justice Department has also launched a criminal probe and the US Environmental Protection Agency could slap VW with penalties totalling billions of dollars.

The world's biggest car manufacturer also faces the prospect of individual and class action lawsuits around the world as well as further action from governments in France, Italy, South Korea, Canada, New Zealand and the UK, who are all investigating.

Credit ratings agencies S&P and Moody's have both placed VW on "negative credit watch", as the automaker looks likely to incur "substantial penalties", following a similar move from Fitch on Wednesday.

Seat, the Spanish subsidiary of German group Volkswagen, installed over 500,000 Spanish-made cars with the infamous pollution-cheating software, the daily newspaper El Pais reported.

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