VW Says Eleven Million Diesels Rigged, CEO Winterkorn Resigns

About 11 million Volkswagen vehicles worldwide have diesel engines with software "irregularities," as the scandal that started in the U.S. widens.

Examinations have shown that the emission-control software built into U.S. models that were found to be violating U.S. clean air rules has also been used in other VW group diesel cars, VW said in a statement issued September 22. After defiance and apologies, VW Chief Executive Officer Martin Winterkorn resigned on September 23.

"As C.E.O. I accept responsibility for the irregularities that have been found in diesel engines," said Winterkorn, who had headed the company since 2007, in a statement. But he continued to insist he personally committed no misconduct. "I am not aware of any wrong doing on my part."

The automaker plans to set aside 6.5 billion euros ($7.3 billion) in the third quarter to cover the costs of addressing the issue. The amount of provisions it needs could still change as the investigation continues, VW said. "Earnings targets for the group for 2015 will be adjusted accordingly," VW said, without providing details.

WV will attempt resolution by retrofitting vehicles with hardware it expects will bring them into compliance with government pollution standards in the U.S. and other parts of the world. Customers will be contacted "in the next few days" with details of the fix, said new VW CEO Matthias Mueller.

The retrofit comes as VW faces potential EPA fines of more than $18 billion in the U.S., as well as a criminal investigation. Similar problems face the company abroad, with German authorities demanding a fix by October 7. But beyond the actual cost of the repairs – estimated by some analysts at $6.5 billion – the retrofit actually could exacerbate the legal dilemma the maker faces in the U.S. where a number of class action lawsuits by consumers have already been filed.

Diesel cars with so-called Type EA 189 engines built into about 11 million VW models worldwide have shown a "noticeable deviation" in emission levels between testing and road use, the company said.

France, South Korea, and Italy were among countries that said they would look further into revelations that VW rigged diesel vehicles to pass emissions tests in the U.S.

More information about U.S. regulatory reaction to these events can be found in the Legislative section of this newsletter.

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