VW shares skid as emissions-cheating scandal widens

Shares in Volkswagen tumbled on the Frankfurt stock exchange on Tuesday amid new accusations in the ever-widening emissions cheating scandal, but the German auto giant adamantly denied the new charges.

VW shares skidded 5.1 percent lower at the start of trade to an intraday low of 107.00 euros after US regulators had accused it late Monday of fitting illegal "defeat devices" into its larger 3.0 liter diesel engines.

In an affair that has rocked the automobile sector around the world since it broke in September, the carmaker has already admitted using the software, which skews the results of pollution tests, in smaller 2.0 liter diesels equipped in some 11 million cars worldwide.
But the US Environmental Protection Agency said late Monday it had discovered in its investigation that various six-cylinder 3.0 litre diesel VW Touareg, Porsche Cayenne and Audis had also been rigged with the software.

"We have clear evidence of these additional violations," said Cynthia Giles, an official with the EPA's Enforcement and Compliance Assurance office.

"VW has once again failed its obligation to comply with the law that protects clean air for all Americans," she said.

- VW denies new allegations -

VW, the world's number two carmaker by sales, denied the new charges.
"Volkswagen AG wishes to emphasise that no software has been installed in the 3-litre V6 diesel power units to alter emissions characteristics in a forbidden manner," it said in a statement.

"Volkswagen will cooperate fully with the EPA (to) clarify this matter in its entirety."

Separately, VW's luxury sports car brand Porsche, said: "We are surprised to learn this information. Until this notice, all of our information was that the Porsche Cayenne Diesel is fully compliant."

In terms of image, the scandal is turning into a veritable car crash for a company long seen an emblem of Germany's industrial might.

Already one chief executive of the company, Martin Winterkorn, has lost his job, and shares of the giant have lost nearly one-third of their value since the scandal erupted.

The new US notice of violation, for the larger-engined cars, could weigh on Winterkorn's replacement, Matthias Mueller, who was elevated from running VW's Porsche subsidiary. At the time of his promotion, Porsche vehicles were not known to have the defeat devices.
Moreover, the first notice of violation on September 18, which launched the scandal, made clear that from the EPA alone, the company was facing a potential $18 billion in fines, based on the maximum allowed per vehicle and the half-million US-sold cars covered.

There are also a number of owner lawsuits against the company, and it could be hit with fines in other countries and regions as well.

- Financial losses -

The new notice covers about 10,000 mostly luxury cars already sold in the United States, and an unknown number still unsold.
But, as with the initial notice, it was possible that the same cars sold elsewhere would be shown to have software defeat devices as well.

After the first accusations in September, Volkswagen publicly admitted that its smaller diesels had the devices, and promised full cooperation in probes by not only US but also German and European authorities, and those in other countries.

The US House of Representatives Energy and Commerce Committee, which has opened a probe into the emissions scandal, said the new allegations meant "it's time for Volkswagen to fully come clean."

"The EPA expanding its investigation prompts questions regarding the prevalence of the emissions cheating and how it went undetected for so long," committee leaders said in a statement.

The scandal is clearly taking a toll on Volkswagen's finances.
Last week, the company booked its first quarterly loss in more than 15 years as it set aside 6.7 billion euros ($7.4 billion) to cover the initial costs of the scandal.

Chief financial officer Frank Witter warned of further "considerable financial charges" from the emissions case.

It was "far too early to calculate the cost of any legal measures," Witter said. "The financial burden will be enormous, but manageable."

Source: AFP