Volkswagen chief under pressure as emissions scandal widens

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Berlin (dpa) – Volkswagen chief Martin Winterkorn was facing mounting pressure as the emissions cheating scandal that has rocked Europe’s biggest carmaker widened Tuesday.

Shares in the German carmaker crashed a further 23 per cent on Tuesday, wiping billions off the company’s value after it issued a profit warning and admitted that emissions tests for about 11 million cars worldwide may have been manipulated.

VW said it was setting aside 6.5 billion euros (7.3 billion dollars) the in the third quarter as a precautionary measure. The company faces fines totalling more than 18 billion dollars as well as compensation claims and recall expenses.

VW’s powerful supervisory board executive meets on Wednesday and the full board on Friday.

Winterkorn’s contract had been expected to be formally extended to 2018 at the Friday meeting.

But on Tuesday a former supervisory board member said the company should delay the contract extension until a probe into the scandal had been completed.

“No decision should be made until it is completely clear who in the company was aware of the manipulation and under whose orders they were acting,” said Joerg Bode, who as Lower Saxony’s economics minister represented from 2009 to 2013 the German state where VW is based.

This is the second time this year that VW has been engulfed by a crisis. Winterkorn earlier emerged victorious from a bruising power struggle with former supervisory board chief Ferdinand Piech.

A mainstay of Germany’s car industry and a symbol of the nation’s engineering prowess, VW was plunged into scandal at the weekend after it admitted that it had equipped about 482,000 cars in the US with sophisticated software aimed at avoiding the emissions test.

VW said that it had uncovered “striking differences” in about 11 million cars worldwide between the measured values in tests and when they are in normal driving conditions.

The scandal that has engulfed VW represents a major blow to the group’s ambitions to replace Japan’s Toyota as the world’s top carmaker.

German Chancellor Angela Merkel called for a rapid and “fully transparent” probe amid concerns about the threat the scandal posed to German industry’s claim of high quality manufacturing.

“I hope that the facts are quickly presented on the table,” Merkel said.

Underlining the scale of the crisis, shares in Germany’s other leading carmakers – BMW and Mercedes Benz manufacturer Daimler – tumbled about 7 per cent on the Frankfurt Stock Exchange on Tuesday.

VW stock closed down 18.6 per cent on Monday wiping 13 billion euros off the company’s value.

“In my German words, we totally screwed up,” said Michael Horn, who heads up the Volkswagen’s US operations.

VW had been “dishonest” with environmental regulators, the chief executive of Volkswagen Group of America, told an audience in New York at a launch event for the company’s new Passat model late Monday.

The US Justice Department is conducting a criminal probe of the emissions case, the Bloomberg news agency reported late Monday, citing US officials speaking on condition of anonymity.

The investigation comes in the wake of the US Environmental Protection Agency (EPA) late last week ordering VW to recall nearly a half million diesel engine cars.

The EPA said VW had equipped its Audi, VW Jetta, Beetle, Golf and Passat models in the US with the software that covertly turns off pollution controls when the car is being driven, and turns them on only when it detects that the car is undergoing an emissions test.

The scandal also spread Tuesday to Asia and other parts of Europe.

Both Australia and South Korea are demanding their own investigations into whether the emissions-cheating software was installed in vehicles sold in their countries, according to reports.

Italy’s Transport Ministry has also written Germany’s transport authorities expressing concern about the scandal and asking it to confirm whether it approved the emission cheating software and whether it was fitted to Italy-bound cars.

The German government also plans to launch its own investigation to establish whether VW or other carmakers manipulated the nation’s emissions test.

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