The Volkswagen pollution cheating scandal escalated dramatically on Tuesday when the automaker revealed 11 million of its cars worldwide could be affected, wiping a third off the company’s market value and threatening to topple its chief executive.
In a statement after the news broke last week, VW said: “We are working to develop a remedy that meets emissions standards and satisfies our loyal and valued customers”. German Chancellor Angela Merkel called the Volkswagen issue “difficult” and urged the company to explain its actions thoroughly.
The potential exposure to VW is huge .
Shares in Volkswagen plunged 17% Tuesday, after suffering a similar crash Monday.
The crisis could lead to a shake-up in management at Volkswagen AG, industry analysts have warned. Some suspect that the pollution level could be 40 times higher in case the controls are not activated.
Volkswagen has been ordered to recall the vehicles, and the company is halting sales of some cars in the U.S.
It added that the software is also installed in other vehicles with diesel engines but that that for the “majority of these engines the software does not have any effect”.
US diesel emissions limits, mainly for ozone-causing nitrogen oxide, are more strict than those in Europe.
Volkswagen Canada told dealers on Monday to stop selling diesel-powered vehicles involved in the emissions-testing scandal, including the Jetta, the Golf and the Beetle.
Volkswagen CEO Martin Winterkorn has once again apologized for his company’s betrayal of the public trust by cheating diesel emissions testing. The article cited EPA officials stating that the maximum fines are nearly never reached, and that “the federal government will consider such factors as the egregiousness of the offense, the amount of harm done, and how cooperative the offending party has been”, in determining VW’s fate.
The probe is separate from a Justice Department investigation being run out of Washington.
Volkswagen has set aside about US$7 billion to correct the problem, but could face an additional US$18 billion in fines and penalties.
Audi, which is owned by Volkswagen, also implemented a stop-sale for its model with that same engine, the A3 2.0 TDI.
But perhaps the biggest question concerns the impact the scandal will have on VW’s image and sales.
This article was first published on Sept 23, 2015.