VW emissions probe spreads to Asia 

The South Korean government said that it will start an investigation into Volkswagen’s (VW) diesel cars after the automaker admitted to rigging emissions tests in the US.

The government said it would test up to 5,000 VW Jetta and Golf cars, along with Audi A3s made in 2014 and 2015.

The probe will be expanded to all German diesel cars if issues are found.

VW shares plunged nearly 20% on Monday after US regulators found that some VW cars could manipulate emissions tests.

The Environmental Protection Agency (EPA) found that software in several diesel cars could deceive regulators.

Volkswagen was ordered to recall half a million cars in the US on Friday.

In addition to paying for the recall, VW faces fines that could add up to billions of dollars. There may also be criminal charges for VW executives.

The White House in Washington also reportedly said it was “quite concerned” about VW’s conduct.

Chief apologises

Volkswagen chief executive Martin Winterkorn apologised after the scandal emerged and said he would “support” the German transport ministry’s investigation into the carmaker.

“I personally am deeply sorry that we have broken the trust of our customers and the public,” Mr. Winterkorn said.

He has launched an investigation into the software that allowed VW cars to emit less during tests than they would while driving normally.

The EPA found the “defeat device” in diesel cars including the Audi A3 and the VW Jetta, Beetle, Golf and Passat models.

VW has stopped selling the relevant diesel models in the US, where diesel cars account for about a quarter of sales.

The EPA said that the fine for each vehicle that did not comply with federal clean air rules would be up to $37,500 (£24,000). With 482,000 cars sold since 2008 involved in the allegations, it means the fines could reach $18bn.

That would be a considerable amount, even for the company that recently overtook Toyota to be the world’s top-selling vehicle maker in the first six months of the year. Its stock market value is about €66bn ($75bn; £48bn).

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Analysis: Richard Westcott, Transport Correspondent

There’s one question people keep asking me at the moment. Is this the car industry’s version of Libor, the scandal that rocked the financial world?

It’s way too early to say just yet. But the pressure is now on the car industry to prove that cheating the pollution figures isn’t a widespread problem stretching across both sides of the Atlantic.

The German government is investigating whether other companies are massaging their emissions data. The American regulator is widening its probe to other carmakers.

If they dig up more examples, the implications could be huge. Fines running into billions. A complete loss of credibility. And worst of all, the possibility that people have become ill or even died early because of higher emissions.

Americans don’t tend to buy diesels. They represent just 3% of their car market. But half of all new cars sold in Europe are a diesel.

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Investigation

VW has ordered an external investigation, although it has not revealed who will be conducting it.

“We do not and will not tolerate violations of any kind of our internal rules or of the law,” Mr Winterkorn said

‘Big problem’

The scandal comes five months after former chairman Ferdinand Piech left Volkswagen following disagreements with Mr Winterkorn.

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

The VW board is due to meet on Friday to decide whether to renew the chief executive’s contract until 2018, and some analysts speculated Mr Winterkorn may be on his way out.

“No question that this is a big problem for Volkswagen and could lead to [the chief executive] losing his job,” said Prof Christian Stadler from Warwick Business School.

He compared the scandal to Toyota recalling nine million cars between 2009-11.

“To some extent, the cheating by Volkswagen seems more blatant, but the numbers are lower and there are no fatalities involved.

“This suggests that in the heat of the moment, the long-term effect on Volkswagen may be overstated. Sure, it will hurt, but maybe not quite as bad as we expect right now.”

Legal action

VW had been promoting its diesel cars in the US as being better for the environment.

The US law firm Hagens Berman is launching a class-action suit against VW on behalf of people who bought the relevant cars.

The models cited by the law firm are the diesel versions in the US of:

• Jetta (2009 – 2015)
• Beetle (2009 – 2015)
• Audi A3 (2009 – 2015)
• Golf (2009 – 2015)
• Passat (2014 – 2015)

“While Volkswagen tells consumers that its diesel cars meet California emissions standards, vehicle owners are duped into paying for vehicles that do not meet this standard and unknowingly pay more for quality they never receive,” Hagens Berman alleged.

Source: bbc – VW emissions probe spreads to Asia

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