Volkswagen says more than 11 million vehicles are affected in the emissions test-rigging scandal it admitted to after being discovered by the U.S. Environmental Protection Agency. This is more than the number of vehicles the European auto manufacturer makes in a year and is 20 times more than the 500,000 vehicles in the U.S. the company earlier said was affected.
Surpassing Toyota as the world's largest carmaker earlier this year, Volkswagen is considered the crown jewel of the German industry. However, the future of the entire company is at stake as it battles a cheating scandal where Volkswagen acknowledged that it had inserted lines of code into its diesel engines that would allow the vehicle to pass the emissions test, even while it actually emitted more than 40 times the amount of nitrogen oxide, a noxious substance that causes respiratory problems in humans.
In the most recent development, the company says in a blog post that 11 million vehicles equipped with its 2-liter Type EA 189 engines have demonstrated a "noticeable deviation" in their emissions test results and their actual emissions. These include the Volkswagen Jetta, Passat, Golf and Beetle cars, as well as the Audi A3.
Volkswagen also says it has allotted some 6.5 billion euros, or approximately $7.3 billion, to cover the costs of servicing customers' vehicles and "other measures to bring back the trust" of its now disgruntled buyers. However, the amount Volkswagen set aside will not be enough, as the potential fine it could pay the U.S. alone could reach up to $18 billion.
Furthermore, sources tell Reuters that the Justice Department is looking into launching a criminal probe on whether the company's executives, led by then CEO Martin Winterkorn, were aware of the "defeat device" incorporated into millions of its vehicles made since 2009.
"Winterkorn either knew of proceedings in the U.S. or it was not reported to him," Arndt Ellinghorst, analyst at Evercore ISI, says.
Winterkorn resigned amid the controversy, saying his departure should help clear the way for a "fresh start" for the car company.
So far, the European Union, which has less stringent standards and enforcement measures than the U.S., has not launched a formal investigation, but individual nations have started their own probe, beginning with the company's home country, where the German Transport Ministry will create a committee that will look into whether Volkswagen violated German and European standards. Switzerland and Italy are also conducting investigations, with Italy placing the burden of proof on Volkswagen to prove its vehicles meet the country's standards.
Meanwhile, in Asia, the South Korean environment ministry has announced that it will look into some 5,000 Jetta, Golf and Audi A3 imported into the country in 2014 and 2015. The investigation is set to be completed in two months, with "punitive measures" in place if investigators find Volkswagen's vehicles do not meet South Korean standards.
South Korea also plans to open the investigation to all German carmakers if it finds Volkswagen committed violations.
Europe and Asia are Volkswagen's biggest markets, where each comprise around 40 percent of the company's market share respectively. The U.S., meanwhile, only comprises 6 percent of the company's unit sales.
