Volkswagen says pollution cheating dates back to 2005

Volkswagen chief Matthias Mueller is pictured on screens during the company's press conference.
Volkswagen chief Matthias Mueller is pictured on screens during the company's press conference.PHOTO: EPA

WOLFSBURG, Germany (AFP) - Volkswagen said on Thursday that the roots of its massive pollution-cheating scandal go back to 2005, and while the current situation was difficult, it would not break the company.

At a news conference to present the latest developments in the auto giant's investigation into the affair, Volkswagen supervisory board chief Hans Dieter Poetsch and chief executive Matthias Mueller said evidence suggested the scam was the work of just a small group of engineers.

There was "no evidence to suggest that supervisory board members or management board members are implicated," Poetsch said.

Volkswagen was plunged into its deepest-ever scandal in September, when it was forced to admit it had installed emission-cheating software into 11 million diesel engine vehicles worldwide.

The revelations sent shockwaves through the world's auto sector and there were fears the scandal could also hit the wider German economy.

The costs facing Volkswagen, once seen as the paragon of German industry, are still incalculable, not only in terms of reputation and global earnings, but with regard to the potential billions in possible fines and legal costs as well.

Chief executive Mueller, brought in to resolve the crisis, said Volkswagen was "currently doing everything it can to limit the effect the current situation has on its business performance." But the group was sticking to its latest targets.

"Overall, the situation is not dramatic, but, as was to be expected, it's tense," said the 62-year-old.

"Although the current situation is serious, this company will not be broken by it," he insisted.

Supervisory board chief Poetsch said the scam was "not attributable to a one-off error, but an unbroken chain of errors," dating back to 2005, when Volkswagen launched a massive new campaign to sell diesel engine vehicles in the United States.

Volkswagen, which had looked set to overtake Toyota this year as the world's biggest carmaker in terms of sales, confessed to systematically fitting so-called defeat devices into its diesel cars in order to meet the rigorous emission standards in the US.

Defeat devices are sophisticated software designed to turn on pollution controls when the car is undergoing testing, and turn them off when the car is back on the road, allowing it to spew out harmful levels of nitrogen oxide.

US authorities had been alerted to Volkswagen's cheating practices by a non-profit group called the International Council on Clean Transportation.

A slew of different investigations, both criminal and regulatory, followed in a number of different countries, all of which are still ongoing.

Volkswagen, too, launched internal and external inquiries of its own.

Mueller and Poetsch said it was still too soon to pinpoint exactly who were the masterminds behind the scam.

But Volkswagen has said that around 50 employees have come forward so far to testify. The carmaker employs a global workforce of around 600,000.

Eight employees have been suspended.

The head of development at Volkswagen's luxury brand Audi, Ulrich Hackenberg, had been rumoured to be among those responsible. His departure was announced by the carmaker last week, but Volkswagen did not provide any reason.

Mueller's predecessor, Martin Winterkorn, also took his hat, even if he insisted he knew nothing of the scam.

The auto giant has drawn up the battle plans for a massive recall operation for the millions of cars affected, with the necessary remedial action ranging from a simple software update in some cases to the insertion of new hardware in others.

Volkswagen was nevertheless afforded some welcome respite from its woes this week, when it said that allegations it had lied about the carbon emissions of some of its cars had proven to be unfounded.

In addition to the manipulated engine software, Volkswagen admitted in November that "inconsistencies" had been uncovered on its cars' carbon emissions.

Carbon dioxide or CO2 is a greenhouse gas which traps heat from the sun and is blamed for man-made climate change.

And tackling CO2 is becoming a rising priority in many countries, especially in Europe, where cars are often taxed according to their carbon emissions.

But "extensive" investigations had shown that the carbon emission values were largely correct and that there would be no consequences for customers, Volkswagen said.

That news had pushed Volkswagen shares up strongly on Wednesday. And by late afternoon in Frankfurt on Thursday, they were showing a gain of 0.53 per cent in a slightly firmer market.