Volkswagen admits 11 mn cars have pollution cheating device
German automaker Volkswagen on Tuesday said that 11 million diesel cars worldwide are fitted with devices that can cheat pollution tests, a dramatic expansion of a scandal that immediately sent its shares plummeting by another 20%.business Updated: Sep 22, 2015 19:30 IST
German automaker Volkswagen on Tuesday said that 11 million diesel cars worldwide are fitted with devices that can cheat pollution tests, a dramatic expansion of a scandal that immediately sent its shares plummeting by another 20%.
Authorities from France to South Korea to the United States announced investigations and threatened legal action, prompting Volkswagen to announce that it was setting aside 6.5 billion euros (USD 7.3 billion) in provisions for the third quarter to cover the potential costs of the scandal.
VW shares, which dived 17% on Monday, plunged by another 23% to a low of 101.30 euros during trade on the Frankfurt stock exchange as the automaker's new revelations, including a warning that it will have to lower its profit outlook, sent investors fleeing.
"Further internal investigations have shown that the software concerned is also installed in other diesel vehicles," VW said in a statement.
"Anomalies have shown up in around 11 million cars worldwide that are equipped with a specific engine type," the car manufacturer added.
"In order to cover the necessary service and other measures to win back customer confidence, VW plans to set aside 6.5 billion euros in provisions in the third quarter. The group's earnings targets for 2015 will be adjusted accordingly."
The spiralling scandal has led to France calling for a Europe-wide probe into the revelations, South Korea summoning Volkswagen officials, and the US Justice Department reportedly launching a criminal investigation.
The scandal went public Friday when US regulators ordered Volkswagen, the world's largest automaker by sales, to fix the defect and said they were launching a probe.
The German firm halted all diesel vehicle sales in the United States during the US investigation, which could lead to fines of more than $18 billion.
The shockwave immediately hit stock markets, with VW shedding more than a quarter of their value -- or more than 20 billion euros -- since last week.
Other automobile stocks were also dragged lower with Daimler shares down 7.03% and BMW shedding 7.17% on Tuesday.
French Finance Minister Michel Sapin today requested a Europe-wide probe, telling French radio that it seemed necessary to check cars manufactured by other European carmakers in order to reassure the public.
"This is not a minor subject, it's not about speed or the quality of leather," Sapin told Europe 1 radio station.
"What we are dealing with is making sure people avoid being poisoned by pollution," the minister said.