20°C / 22°C
  • Mon
  • 33°C
  • 19°C
  • Tue
  • 29°C
  • 12°C
  • Wed
  • 28°C
  • 11°C
  • Thu
  • 32°C
  • 15°C
  • Fri
  • 29°C
  • 18°C
  • Sat
  • 29°C
  • 15°C
  • Mon
  • 18°C
  • 12°C
  • Tue
  • 21°C
  • 11°C
  • Wed
  • 17°C
  • 11°C
  • Thu
  • 19°C
  • 11°C
  • Fri
  • 18°C
  • 13°C
  • Sat
  • 18°C
  • 13°C
  • Mon
  • 37°C
  • 19°C
  • Tue
  • 30°C
  • 13°C
  • Wed
  • 30°C
  • 12°C
  • Thu
  • 35°C
  • 18°C
  • Fri
  • 31°C
  • 20°C
  • Sat
  • 31°C
  • 17°C
  • Mon
  • 34°C
  • 17°C
  • Tue
  • 30°C
  • 14°C
  • Wed
  • 30°C
  • 13°C
  • Thu
  • 35°C
  • 16°C
  • Fri
  • 31°C
  • 22°C
  • Sat
  • 31°C
  • 18°C
  • Mon
  • 23°C
  • 16°C
  • Tue
  • 18°C
  • 14°C
  • Wed
  • 29°C
  • 16°C
  • Thu
  • 23°C
  • 17°C
  • Fri
  • 27°C
  • 18°C
  • Sat
  • 26°C
  • 19°C
  • Mon
  • 17°C
  • 13°C
  • Tue
  • 17°C
  • 12°C
  • Wed
  • 18°C
  • 11°C
  • Thu
  • 19°C
  • 12°C
  • Fri
  • 22°C
  • 14°C
  • Sat
  • 19°C
  • 15°C
  • Mon
  • 18°C
  • 10°C
  • Tue
  • 23°C
  • 9°C
  • Wed
  • 18°C
  • 9°C
  • Thu
  • 23°C
  • 10°C
  • Fri
  • 21°C
  • 11°C
  • Sat
  • 18°C
  • 9°C
  • Mon
  • 16°C
  • 11°C
  • Tue
  • 19°C
  • 10°C
  • Wed
  • 17°C
  • 11°C
  • Thu
  • 20°C
  • 12°C
  • Fri
  • 20°C
  • 13°C
  • Sat
  • 17°C
  • 12°C
  • Mon
  • 36°C
  • 23°C
  • Tue
  • 33°C
  • 17°C
  • Wed
  • 32°C
  • 15°C
  • Thu
  • 36°C
  • 18°C
  • Fri
  • 33°C
  • 21°C
  • Sat
  • 34°C
  • 19°C
  • Mon
  • 29°C
  • 14°C
  • Tue
  • 30°C
  • 10°C
  • Wed
  • 28°C
  • 13°C
  • Thu
  • 31°C
  • 11°C
  • Fri
  • 31°C
  • 13°C
  • Sat
  • 30°C
  • 14°C
  • Mon
  • 34°C
  • 17°C
  • Tue
  • 18°C
  • 14°C
  • Wed
  • 33°C
  • 14°C
  • Thu
  • 29°C
  • 17°C
  • Fri
  • 34°C
  • 15°C
  • Sat
  • 34°C
  • 19°C
  • Mon
  • 16°C
  • 10°C
  • Tue
  • 17°C
  • 9°C
  • Wed
  • 19°C
  • 11°C
  • Thu
  • 20°C
  • 10°C
  • Fri
  • 23°C
  • 14°C
  • Sat
  • 17°C
  • 13°C

Volkswagen shares plunge on emissions scandal

The German carmaker admitted it had rigged emissions tests in the United States.

The 2015 Jetta. Picture: Kgothatso Mogale/EWN

BERLIN/WASHINGTON - Volkswagen shares plunged more than 20% on Monday, their biggest one-day fall, after the German carmaker admitted it had rigged emissions tests in the US, and US authorities said they would widen their probe to other manufacturers.

Germany, alarmed at the potential damage the scandal could inflict on its world-beating car industry, urged Volkswagen to fully clear up the matter and said it would investigate whether emissions data had also been falsified in Europe.

The US Environmental Protection Agency (EPA) said on Friday Europe's biggest carmaker had used software for diesel VW and Audi branded cars that deceived regulators measuring toxic emissions and could face penalties of up to $18 billion.

The EPA and California officials said on Monday they would test the use of software in diesel vehicles from other manufacturers for similar possible violations.

"You will understand that we are worried that the justifiably excellent reputation of the German car industry and in particular that of Volkswagen suffers," German Economy Minister Sigmar Gabriel said.

Germany's transport minister was due to discuss the issue with Volkswagen Chief Executive Martin Winterkorn on Monday, two government sources said, without elaborating.

Winterkorn said on Sunday he was "deeply sorry" for the breach of US rules and ordered an external investigation. Some said Winterkorn may now have to resign.

"This disaster is beyond all expectations," said Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen.

Analysts said it was unclear whether other automakers had also broken rules or what the ultimate cost could be for VW.

German rivals Daimler and BMW said the accusations made by US authorities against VW did not apply to them.

However, industry experts predicted the scandal would hit VW hard, just as it was hoping to move on from a damaging leadership battle, with a supervisory board meeting on Friday due to discuss a new company structure and management line-up.

Winterkorn, who recently saw off a challenge to his authority with the ousting of long-time chairman Ferdinand Piech, ran the VW brand between 2007 and 2015, including the six-year period when some of its models were found violating US clean air rules.

"DEFEAT DEVICE"

Evidence of increased toxic emissions at VW first emerged in 2014, prompting the Californian Air Resources Board (CARB) to start investigating VW, a letter by CARB to VW dated 18 September showed.

CARB told VW in July that its own testing of vehicles still showed excessive nitrous emissions, leading VW to admit on 3 September that it had used the "defeat device" to bypass control rules.

A source close to Volkswagen said any decision on emissions control mechanisms would have been taken at the group's Wolfsburg headquarters and not by regional divisions.

Germany's Robert Bosch supplies diesel emissions control devices to VW, an industry source said. Asked whether Bosch had supplied the electronic control module central to the EPA test findings, a company spokesman said: "We supply components for exhaust after-treatment to several manufacturers. The integration is the responsibility of the manufacturer."

The way carmakers test vehicles has been coming under growing scrutiny from regulators amid complaints from environmental groups that they use loopholes in the rules to exaggerate fuel-saving and emissions results.

The European Commission said it was in contact with VW and US regulators, but that it was too early to say whether any specific immediate surveillance measures were needed in Europe or whether VW vehicles in Europe were also affected.

"We are taking the matter very seriously and will update you on further developments," a Commission spokesman said.

At 1530 GMT, VW shares were down 18.8% at €131.8, after hitting a three-year low of €125,4. Shares in Porsche SE, a holding company which controls 51% of VW's common stock, also plunged around 20%, while the European autos index was down 3.9%.

VW overtook Japan's Toyota in the first half of this year to become the world's biggest carmaker by sales, but is facing a sharp slowdown in its most profitable market, China.

The US scandal also adds to the challenge it faces in reviving its North American business, which has long lagged its performance elsewhere, with analysts blaming a centralised structure for hampering its ability to adapt to local conditions.

"HUGE LOSS OF TRUST"

Ingo Speich, a fund manager at Union Investment that owns about 0.4% of VW shares, said he was braced for the crisis to spread for the carmaker that makes vehicles from budget Seats and Skodas to luxury Bentleys and Lamborghinis.

"The market is anticipating more than just the US issue. We have to admit that just looking at the facts there is a huge loss of trust in management. That is the main issue," he said.

"For now we see this as a Volkswagen issue," he added.

Exane BNP analysts, however, said VW's problems could have wider implications for diesel vehicles, which have long struggled to gain a foothold in the US market in particular.

A panel of senior supervisory board members at Volkswagen will meet on Wednesday to discuss the scandal, three people familiar with the matter said.

Bernd Osterloh, the head of VW's works council and a supervisory board member, called for those responsible to be held accountable. He said Winterkorn would resign should investigations prove he was personally responsible for the alleged manipulations.

However, the carmaker's second-largest shareholder, the German state of Lower Saxony, said decisions would have to wait until the crisis had been "fully and thoroughly" examined.

As well as regulatory fines, analysts said VW could be hit by a drop in sales as well as lawsuits from shareholders and environmental groups.

The company has already told its US dealers to stop selling the diesel models criticized by US regulators, while Keller Rohrback LLP has filed a nationwide class action complaint against VW's US division, alleging it deliberately deceived consumers and regulators in its emissions testing.

Ratings agency Fitch said the deepening crisis could pressure the company's credit ratings.

Comments

EWN welcomes all comments that are constructive, contribute to discussions in a meaningful manner and take stories forward.

However, we will NOT condone the following:

- Racism (including offensive comments based on ethnicity and nationality)
- Sexism
- Homophobia
- Religious intolerance
- Cyber bullying
- Hate speech
- Derogatory language
- Comments inciting violence.

We ask that your comments remain relevant to the articles they appear on and do not include general banter or conversation as this dilutes the effectiveness of the comments section.

We strive to make the EWN community a safe and welcoming space for all.

EWN reserves the right to: 1) remove any comments that do not follow the above guidelines; and, 2) ban users who repeatedly infringe the rules.

Should you find any comments upsetting or offensive you can also flag them and we will assess it against our guidelines.

EWN is constantly reviewing its comments policy in order to create an environment conducive to constructive conversations.

comments powered by Disqus