The emissions-fixing scandal that has engulfed Volkswagen in the US could extend to other companies and countries, one of the officials involved in uncovering the alleged behaviour has told the Guardian.
Billions of pounds have been wiped off the value of global carmakers amid growing concerns that emissions tests may have been rigged across the industry.
“We need to ask the question, is this happening in other countries and is this happening at other manufacturers? Some part of our reaction is not even understanding what has happened exactly,” said John German, one of the two co-leads on the US team of the International Council for Clean Transportation (ICCT), the European-based NGO that raised the alarm.
South Korea said on Tuesday it would investigate emissions of VW Jetta and Gold models and Audi A3 cars produced in 2014 and 2015. If problems are found, South Korea’s environment ministry said its probe could be expanded to all German diesel imports, which have surged in popularity in recent years in a market long dominated by local producers led by Hyundai.
US Congress confirmed it is investigating the scandal on Monday. House energy and commerce committee chairman Fred Upton and oversight and investigations subcommittee chairman Tim Murphy announced that the Oversight and Investigations Subcommittee will hold a hearing.
The US Justice Department is conducting a criminal investigation of Volkswagen admission, according to Bloomberg, which cited two officials familiar with the inquiry.
The company could face a fine of up to $18bn (£11.6bn), criminal charges for its executives, and legal action from customers and shareholders. The US law firm Hagens Berman has already launched a class-action law suit on behalf of customers who bought the affected cars.
VW shares fell by 19% in Frankfurt, wiping almost €15bn (£10.8bn) off its value. Shares in Renault, Volkswagen’s French rival, also dropped by 4%, while Peugeot was down 2.5%, Nissan 2.5% and BMW 1.5% amid concerns they could be caught up in investigations.
The US Environmental Protection Agency (EPA) said on Friday that VW had installed illegal software to cheat emission tests, allowing its diesel cars to produce up to 40 times more pollution than allowed. The US government ordered VW to recall 482,000 VW and Audi cars produced since 2009.
In response, Martin Winterkorn, chief executive of VW, said on Sunday he was “deeply sorry” for breaking the trust of the public and ordered an external investigation.
German tipped off regulators at the California Air Resources Board (Carb) and the EPA after conducting tests that showed major discrepancies in the amount of toxic emissions some VW cars were pumping out compared with the legal limits.
Max Warburton, an analyst at the financial research group Bernstein, said: “There is no way to put an optimistic spin on this – this is really serious.”
Greg Archer, a former government adviser and head of clean vehicles at the respected Transport & Environment thinktank, said: “I am not surprised. There has been a lot of anecdotal evidence about carmakers using these defeat devices. All credit to the EPA for investigating and finding the truth.”
Archer, the former managing director of the UK’s Low Carbon Vehicle Partnership and non-executive director for the government’s Renewable Fuels Agency, said the scandal could spread into petrol cars and CO2 levels. “It is probably not limited to diesel and not limited to emissions,” he added.
The devices are thought to work by injecting more urea – an exhaust fluid – into the car when it is being tested. This limits nitrogen oxide emissions. The car detects it is being tested because devices such as the anti-collision systems have to be turned off when it is in the laboratory. The extra urea is not injected into the car when it is on the road because it would quickly run out.
Archer claims European tests are more open to abuse because they are conducted before the car goes into mass production and by companies that have been paid by the carmakers. These testing companies have been verified by regulators in each country, such as the Vehicle Certification Agency, but in the US the tests are conducted by an independent body.
Industry leaders in Britain claimed there was “no evidence” that manufacturers are cheating the system in Europe but admitted it needs to be reformed.
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, the industry trade body, said: “The EU operates a fundamentally different system to the US – with all European tests performed in strict conditions as required by EU law and witnessed by a government-appointed independent approval agency. There is no evidence that manufacturers cheat the cycle.
“The industry acknowledges, however, that the current test method is outdated and is seeking agreement from the European Commission for a new emissions test that embraces new testing technologies and is more representative of on-road conditions.”
The US allegations involve a series of diesel cars produced by VW and the brands it owns, such as Audi. These include the Audi A3, VW Jetta, Beetle, Golf and Passat models. VW has halted sales of these models.
Jochen Flasbarth, a senior environment official in the German government, accused Volkswagen of “blatant consumer deception” over the scandal. The country’s economy minister, Sigmar Gabriel, also warned it could damage the reputation of the country’s vital automotive industry.
“That this is a bad case, I think is clear,” Gabriel said. “You will understand that we are worried that the justifiably excellent reputation of the German car industry and in particular that of Volkswagen suffers.” The German government has launched its own investigation into VW and held talks with executives.
The scandal puts the future of Volkswagen chief Winterkorn in serious doubt. Earlier this year he won an internal power struggle with Ferdinand Piëch, who stepped down as chairman. The board of the company is due to meet on Friday to discuss extending Winterkorn’s contract.
Winterkorn has been at the helm of VW since 2007 and has been directly responsible for research and development since then.
Guido Reinking, a German automotive analyst, told German television station n-tv: “It’s almost impossible to imagine that he didn’t know about this special way of programming the engine.”
David Bailey, professor of industrial strategy at Aston University in Birmingham, said: “If it is the case that they have been trying to hoodwink regulators, it’s a really dumb thing to do. Regulators will look at this more closely now. There has been growing concern about diesel cars and nitrous oxide emissions. The industry has been trying to make the case that the latest regulations largely deal with that issue but regulators will now look more closely at whether they have.”
In the wake of the scandal two senior VW executives cancelled a planned appearance at a media event in New York with rock star Lenny Kravitz scheduled for Monday evening.
Herbert Diess, chairman of the VW brand’s management board, and Heinz-Jakob Neusser, VW’s board member in charge of technical development, had planned to attend the event to introduce the latest version of the Passat mid-size sedan.
The chief executive of VW’s US arm, Michael Horn, was still due to attend the event. He is expected to provide a statement about the situation.
This article was written by Joanna Walters, Graham Ruddick and Sean Farrell, for theguardian.com on Tuesday 22nd September 2015 04.45 Europe/Londonguardian.co.uk © Guardian News and Media Limited 2010