Germany presses VW to clean up over scandal
Print Edition
GERMAN officials stepped up the pressure on Volkswagen to clean up its act yesterday after it revealed it had understated the fuel consumption of some vehicles, opening a new front in the crisis at Europe’s biggest carmaker.
The company said late on Tuesday that it had understated the level of carbon dioxide emissions in up to 800,000 cars sold in Europe, and consequently their fuel usage. This means affected vehicles are more expensive to drive than their buyers had been led to believe.
The revelations add a new dimension to a crisis that had previously focused on VW cheating tests for smog-causing nitrogen oxide emissions. They are the first to threaten to make a serious dent in the firm’s car sales since the scandal erupted as they could deter cost-conscious consumers, analysts said.
The latest admission provoked some of the strongest criticism yet from the German government of VW, which is part of an auto industry that employs over 750,000 people in the country, has been a symbol of German engineering prowess and dwarfs other sectors of the economy.
New structures needed
Transport Minister Alexander Dobrindt said the latest irregularities had caused “irritation in my ministry and with me.”
Chancellor Angela Merkel’s spokesman, Steffen Seibert, said the carmaker had to take steps to prevent this happening again. “VW has a duty to clear this up transparently and comprehensively,” he added. “It’s important (for VW) to create structures to avoid such cases.”
The latest revelations, which led to VW adding 2 billion euros (US$2.2 billion) to its expected costs from the scandal, are also the first time gasoline cars have been drawn into the scandal.
VW said most of the 800,000 cars affected by the CO2 issue had diesel engines such as VW’s top-selling Golf, Audi’s A3 hatchback and the Skoda Octavia but two models were gasoline: the VW Polo and the Audi A1, both with 1.4-liter engine and cylinder cut-off.
“Another week, another shock in the VW story,” Exane BNP Paribas analyst Stuart Pearson wrote in a note.
“We add another 4 billion euros in recall costs and fear a harsher commercial impact,” said Pearson, who rates VW “neutral.”
The biggest business crisis in VW’s 78-year history erupted on September 18 when US authorities exposed VW’s use of “defeat devices” to cheat tests for emissions of nitrogen oxide. VW admitted such software was installed in up to 11 million diesel vehicles worldwide.
The scandal has wiped nearly a third — or almost 24 billion euros — off its stock market value.
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