- Company adds about 2 billion euros to possible economic risk
- VW already faced recall for 11 million diesel cars worldwide
Volkswagen AG said it found faulty emissions readings for the first time in gasoline-powered vehicles, widening a scandal that so far had centered on diesel engines. The shares fell the most in almost five weeks.
Volkswagen said an internal probe showed 800,000 cars had “unexplained inconsistencies” concerning their carbon-dioxide output. The automaker had previously estimated it would need to recall 11 million vehicles worldwide, and it was unclear how much overlap there was between the two tallies. The company said late Tuesday that the new finding could add at least 2 billion euros ($2.2 billion) to the 6.7 billion euros already set aside for repairs. The company’s Porsche unit said it’s halting North American sales of a model criticized by U.S. regulators.
The crisis that emerged after Volkswagen admitted in September to cheating U.S. pollution tests for years with illegal software has shaved more than one-third of the company’s stock price and led to a leadership change. Tuesday’s revelation adds to the pressure on Volkswagen’s new chief executive officer, Matthias Mueller, who replaced Martin Winterkorn and was previously head of Porsche. Volkswagen’s supervisory board said it will meet soon to discuss further measures and consequences.
“VW is leaving us all speechless,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI.
The shares fell 8 percent to 102.05 euros at 9:03 a.m. in Frankfurt. The emissions crisis had wiped more than 24 billion euros from Volkswagen’s market value before Tuesday’s news.
Volkswagen’s Polo, Golf and Passat models are affected as well as the subcompact A1 and the A3 hatchback at the Audi premium brand, a Volkswagen spokesman said by phone. The affected models at other brands include the Skoda Octavia, the Seat Ibiza and the Seat Leon.
The 1.4-liter, 1.6-liter and 2-liter TDI diesel engines account for the vast majority of affected cars. The only gasoline engine is a 1.4-liter version with cylinder head shutdown, but the number of those cars “is very limited,” the spokesman said.
Most of the affected cars are in Europe, and the 2 billion euros in possible costs are an initial estimate, according to the spokesman. The automaker will determine how much money to set aside once the probe has been finalized, he said.
The 3.0-liter diesel motors targeted on Monday by a U.S. Environmental Protect Agency probe aren’t part of the latest finding. The company rejected allegations that its cheating on diesel-emissions tests included Porsche and other high-end vehicles. The EPA said its new investigation centers on the Porsche Cayenne and VW Touareg sport utility vehicles and as well as larger sedans and the Q5 SUV from Audi.
Late Tuesday, Porsche’s North American division said it would voluntarily discontinue sales of diesel-powered Cayennes from model years 2014 to 2016 until further notice. The Atlanta-based unit’s statement reiterated that the EPA notice was unexpected and that owners can operate their vehicles normally.
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“We are working intensively to resolve this matter as soon as possible,” Porsche said in the statement.
Wolfsburg, Germany-based Volkswagen said the findings surfaced following a “comprehensive investigation to establish whether there were indications of further irregularities” after the initial findings rocked the company in September.
“This adds to the bad news,” said Sascha Gommel, a Frankfurt-based analyst at Commerzbank AG. “You can of course argue that they pursue a rigorous approach in identifying wrongdoings in the company, but this latest news is clearly negative for the company and you will see this in tomorrow’s share price for sure.”
Including today’s announcement, Volkswagen’s total liabilities might have grown to about 13.2 billion euros, said London-based JPMorgan Chase & Co. analyst Jose Asumendi. “We note that the company continues to leave no stone unturned and still enjoys a 27.8 billion euro net cash position to face the crisis,” Asumendi said in a report.
Mueller has pledged to overhaul the company’s corporate culture, which he said must change to create a more transparent environment that can discover possible faults.
“This is a painful process, but it is our only alternative,” Mueller said in an e-mailed statement. VW “deeply regrets this situation” and “will stop at nothing and nobody” to get to the bottom of the matter, he said.
The scandal has weighed heavily on Volkswagen’s earnings. The automaker reported its first quarterly loss last month in at least 15 years because of the reserve funds set aside to implement fixes.