The European car industry was shaken on Monday as Volkswagen’s share price fell almost 20 per cent over its admission that it cheated on US emissions tests, triggering calls for a broader inquiry into the sector.
More than €13bn was wiped off VW’s market capitalisation, spurring a wider fall in carmakers’ shares, after Martin Winterkorn, the group’s chief executive, apologised and ordered an external investigation into the affair.
The German government called for an urgent probe into whether VW and other carmakers had also manipulated emissions’ tests in Germany. Sigmar Gabriel, Germany’s vice-chancellor, said it was a “bad episode” for the car industry.
Michael Horn, VW’s chief executive in the US, said the company “screwed up” by cheating on vehicle emissions tests, vowed to fix the vehicles involved and to ensure there is no repetition, in the first public appearance by a senior executive since the scandal emerged.
The world’s second-biggest carmaker was ordered on Friday to recall nearly half a million cars in the US after it admitted to the US regulator, the Environmental Protection Agency, that it had fitted “defeat devices” to bypass environmental standards.
The EPA and California Air Resources Board have now begun procuring other manufacturers’ vehicles to test for similar devices, while Berlin plans to examine whether emissions data have been manipulated.
The news prompted a fall in carmakers’ shares with Daimler, BMW, Renault and PSA Peugeot Citroën each being sold off amid investor concerns over the potential scale of the cost to VW and the broader industry. VW faces billions of dollars in fines and warranty costs, possible criminal charges for executives and class-action lawsuits from US drivers…
The European Commission said it was taking the matter “very seriously” and was in contact with both VW and the EPA.
One top-10 shareholder in VW said it could be very costly to VW’s reputation. “There is scope for a whole array of lawsuits in a variety of jurisdictions. The other question to ask is: Is this an industry-wide problem? Will other car groups admit to similar cheating?”