By William Boston
Volkswagen AG said its emissions-testing scandal has widened
beyond what was previously disclosed, now encompassing a broader
set of infractions that could affect about 800,000 more cars and
cost it at least an extra $2 billion.
The German auto maker said Tuesday it understated the level of
carbon-dioxide emissions of the additional cars when providing
information to regulators. Some of these cars were
gasoline-powered, Volkswagen said, moving the violations beyond the
company's diesel fleet for the first time.
Volkswagen disclosed the error after conducting its own
emissions tests. The report is a fresh blow after VW's admission in
September that up to 11 million diesel-powered vehicles world-wide
could have so-called defeat devices that lowered tailpipe emissions
of nitrogen oxides during laboratory testing.
Volkswagen initiated an internal investigation after saying that
some diesel-powered cars of model years between 2009 and 2015 used
software that let them reduce nitrogen-oxide emissions during
tests. U.S. and European authorities have begun regulatory and
criminal investigations.
Tuesday's disclosure is the first to involve the greenhouse gas
carbon dioxide, which has been a focus of both European and U.S.
authorities over the past decade.
Since the first disclosures in September, VW has reshuffled top
management and suspended senior executives in charge of engine
development. The new team is scrutinizing the company's entire
fleet of automobiles.
The Wolfsburg, Germany-based company's supervisory board said it
was "deeply concerned" about the revelation VW misstated
carbon-dioxide emissions in addition to cheating on nitrogen-oxide
tests. The board said it intended to meet soon "to consult on
further measures and consequences."
The company said it was in contact with regulatory agencies to
determine steps needed to clarify the situation and to establish
accurate values for the carbon-dioxide emissions of the affected
vehicles.
"From the very beginning I set out to ensure that we mercilessly
and completely clear up this situation," said Volkswagen Chief
Executive Matthias Müller. "This is a painful process but there is
no alternative."
Volkswagen, Europe's largest auto maker, gave no details about
which vehicles or engines are affected by the misstated
carbon-dioxide levels. Industry analysts said cars sold in Europe
were likely most affected.
In providing an estimate of financial risk from its new
disclosure--EUR2 billion, or $2.19 billion--VW didn't say how it
reached the figure. Last week, it recorded a charge to earnings of
EUR6.7 billion to pay the costs of fixing diesel cars affected by
software that could lower emissions during testing.
"VW is leaving us speechless," said Arndt Ellinghorst, an
automotive analyst at Evercore ISI, a research group.
Tuesday's disclosure came a day after the U.S. Environmental
Protection Agency leveled new allegations. The EPA said it found
defeat devices on 3.0-liter diesel engines used in larger
sport-utility vehicles from against Volkswagen such as its Touraeg,
Porsche Cayenne, Audi Q5 and Q7 SUVs and Audi A6 and A8 sedans. The
agency said the vehicles it tested had nitrogen-oxide emissions up
to nine times the allowable standard.
Volkswagen disputed the EPA's claims, saying it didn't install
any emissions-cheating software on the engines used in these
vehicles.
Volkswagen shares, which have slumped badly amid the emissions
scandal, fell sharply early Tuesday, but recovered somewhat to
finish off less than 2% at EUR109.35 ($119.69) in 4 p.m. trading in
Frankfurt. The auto maker disclosed the carbon dioxide
misstatements after the close of trading in Germany.
Monday's allegations by the EPA hit Porsche, a Volkswagen
sports-car brand and big profit center, for the first time. Mr.
Müller previously ran Porsche, and the latest news raised questions
of what he might have known about engines at Porsche.
Some investors in Europe sold shares on concern that the new EPA
allegations could threaten Mr. Müller just over a month after he
took charge in the wake of Volkswagen's admission that it had
cheated on emissions tests on millions of small and midsize
diesel-powered vehicles.
That admission led to the resignation of Martin Winterkorn, the
former CEO, and catapulted Mr. Müller from head of Porsche AG to
chief of Volkswagen. Now, some analysts are asking whether an
insider is the right person to lead Volkswagen out of the worst
crisis in the company's 78-year history.
"The allegations are all the more serious given that VW's new
CEO Matthias Müller came from Porsche and any hint of further
deception could well see his position come under scrutiny," said
Michael Hewson, chief market analyst at CMC Markets, a brokerage
firm.
Mr. Müller became Porsche's chief in 2010. An insider, he was a
protégé of his predecessor and was liked by the Porsche-Piëch clan
that controls Volkswagen's voting stock. He oversaw Volkswagen
group product planning from 2007 to 2010.
"There was always a chance that Porsche and Audi would be
directly or indirectly involved in the diesel saga," said David
Buik, a market commentator at Panmure Gordon.
Volkswagen's diesel woes have kept investors on edge but seem to
have had little effect on German consumers. Germany's motor vehicle
agency reported Tuesday that registrations of new diesel-powered
cars rose 6% in October.
"Diesel is a key technology for us," said Harald Krüger, BMW AG
chief executive, during an earnings call on Tuesday. "At the
moment, we are seeing no impact on sales from the diesel issue, but
I must add that it is still early days."
Write to William Boston at william.boston@wsj.com
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(END) Dow Jones Newswires
November 03, 2015 21:56 ET (02:56 GMT)
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