Volkswagen was cheating regulators in its own back yard as well as America.
The German government said Friday that the company had illegally manipulated emissions on 2.8 million diesel vehicles in Germany.
“The manipulation of diesel emissions by Volkswagen is forbidden and illegal, there’s no doubt about that,” Alexander Dobrindt, the government’s top transport official told lawmakers.
The revelation comes a week after the company was found to have falsified U.S. pollution tests on half a million VW and Audi diesel cars, and as directors met to name a new CEO.
Martin Winterkorn stepped down as head of the world’s biggest automaker Wednesday in the wake of the shocking admission that it may have manipulated emissions data for as many as 11 million vehicles worldwide.
Volkswagen programmed software to make the cars appear cleaner than they were when being tested. Once on the road, they would pump out up to 40 times the allowed level of nitrogen oxide.
Winterkorn, who claimed to know nothing about the cheating, apologized twice and said he was stunned by the scale of the misconduct. The company has been forced to set aside 6.5 billion euros ($7.3 billion) to cover the cost of the scandal, and the final bill could be many times that.
Volkswagen’s board was meeting Friday and is expected to announce the appointment of a new CEO — a move that will represent just the first step in its attempt to recover.
Media reports suggest it’s a job that’s likely to be handed to Matthias Mueller, currently head of Porsche — also part of the Volkswagen group. Volkswagen declined to comment on those reports.
If his appointment is confirmed, Mueller has an enormous challenge on his hands.
The crisis has shaken the trust of consumers and investors in one of Germany’s engineering icons, which employs some 600,000 people worldwide and accounts for roughly one in 10 vehicles sold globally.
About a quarter of the company’s market value has been wiped out this week, leaving powerful shareholders such as the Porsche family, Qatar and the German state of Lower Saxony nursing big losses.
U.S. regulators could impose fines worth billions of dollars, and prosecutors on both sides of the Atlantic are considering launching criminal investigations. A spokesman said the U.S. Department of Justice is taking the allegations “very seriously.”
VW and Audi drivers are furious too. At least 34 lawsuits have already been filed in the U.S. by people claiming their cars are now less valuable because of the scandal. Dealers could also sue the company for compensation.
Volkswagen is under huge pressure to provide details about what went wrong in Europe, where half of all new cars sold are diesels, and to identify who was responsible. It has promised to work with prosecutors to ensure the perpetrators face the full consequences of causing “unmeasurable harm” to the company.
German regulators are carrying out spot checks on diesel cars made by Volkswagen and other manufacturers, and Britain is rerunning laboratory tests and comparing them with “real world driving emissions” to try to establish the scale of the problem.