VW emissions scandal widens with calls for Europe, Asia probes

MR MICHAEL HORN (left), chief executive of Volkswagen Group of America. He is standing with VW chairman and CEO Martin Winterkorn, who is holding the "North American Car of the Year" award - presented for the VW Golf TDI - at the North American Inter
MR MICHAEL HORN (left), chief executive of Volkswagen Group of America. He is standing with VW chairman and CEO Martin Winterkorn, who is holding the "North American Car of the Year" award - presented for the VW Golf TDI - at the North American International Auto Show at Cobo Arena in Detroit, Michigan, in January.PHOTO: EUROPEAN PRESSPHOTO AGENCY

FRANKFURT • The cheating scandal engulfing vehicle maker Volkswagen spread beyond US borders yesterday, with European and Asian nations calling for a probe, even as the saga threatened to claim its first scalp in the company's chief executive officer.
 

German newspaper Tagesspiegel reported yesterday that Volkswagen is to dismiss chief executive Martin Winterkorn, citing unidentified sources on the company's supervisory board.

The newspaper said he will be replaced by Mr Matthias Mueller, the head of the carmaker's Porsche sports car business, a report the company dismissed as "ridiculous".

Volkswagen, previously regarded as a paragon of German industry, has admitted to the involvement of 11 million cars worldwide in the diesel emission scandal since the US Environmental Protection Agency (EPA) revealed last Friday that the company had cheated on lab tests for pollution.

According to the US authorities, VW admitted to equipping cars with sophisticated software that covertly turns off pollution controls when the car is being driven and turns them on only when it detects that the vehicle is undergoing an emissions test.

WE'VE MESSED UP

We have totally screwed up....This kind of behaviour is totally inconsistent with our qualities.

MR MICHAEL HORN, chief executive of Volkswagen Group of America. He is standing with VW chairman and CEO Martin Winterkorn, who is holding the "North American Car of the Year" award - presented for the VW Golf TDI - at the North American International Auto Show at Cobo Arena in Detroit, Michigan, in January.

With the so-called "defeat device" deactivated, the car can spew pollutant gases into the air, including nitrogen oxide in amounts as much as 40 times higher than emissions standards.

The cases reported in the US pertain to diesel models not sold in Singapore, according to information available so far, the National Environment Agency (NEA) said yesterday. "However, NEA will investigate and will take appropriate action against any cases of fraudulent emissions claims," the agency told The Straits Times.

Shares of the company dived for the second day yesterday, plunging to a four-year low in early trade, as investors fled after it was revealed that the company was exposed to as much as US$18 billion (S$25.5 billion) in fines, even as the US opened a criminal probe into the case.

In a statement, Volkswagen said yesterday that it had set aside €6.5 billion (S$10.3 billion) in provisions in the third quarter to cover potential costs. Volkswagen would have to adjust its profit targets for the current year accordingly, it said.

"Our company was dishonest with the EPA and... with all of you," Mr Michael Horn, the US company head, said on Monday, vowing to win back the trust of consumers. "We have totally screwed up... This kind of behaviour is totally inconsistent with our qualities."

European Union regulators called on member states to rigorously enforce the relevant law. "For the sake of our consumers and the environment, we need certainty that industry scrupulously respects emissions limits," European Commission spokesman Lucia Caudet said.

German Chancellor Angela Merkel pressed the vehicle giant to assure "full transparency" and "clear up the entire matter".

France called for a Europe-wide probe while South Korea said it would conduct its own probe.

"It's not just a US matter for VW - you have regulators all over the globe looking into it with potentially numerous fines to come," said Mr Vincenzo Longo, a strategist for IG Group in Milan. "We don't see any stop to this bloodbath unless there is a change at the head of VW and full cooperation with the authorities. Some heads need to roll to get investors buying back VW."

AGENCE FRANCE-PRESSE, BLOOMBERG

A version of this article appeared in the print edition of The Straits Times on September 23, 2015, with the headline 'VW emissions scandal widens with calls for Europe, Asia probes'. Print Edition | Subscribe