VW shares sink further as the scandal grows
INVESTORS wiped another 3 billion euros (S$4.6 billion) off Volkswagen's (VW's) market value yesterday after it said it had understated the fuel consumption of some cars, opening a new front in a scandal that initially centred on rigging emissions tests.
The carmaker said late on Tuesday it had understated the fuel usage of up to 800,000 cars in Europe, meaning those vehicles affected are more costly to drive than their buyers had been led to believe.
The revelations - which added a new dimension to a crisis that had previously focused on environmental damage - are the first to threaten to make a serious dent in VW's car sales since the scandal erupted, analysts said.
They could potentially deter cost-conscious consumers who have so far taken VW's manipulation of smog-causing emission tests in their stride.
The effects of the scandal have so far been barely reflected in VW sales figures - although it was the only German carmaker to report a decline in car registrations in Germany last month.
Shares in Europe's biggest carmaker were down 8.6 per cent at 101.45 euros by 10.03am GMT.
"Another week, another shock in the VW story," Exane BNP Paribas analyst Stuart Pearson wrote in a note. "We add another 4 billion euros in recall costs and fear a harsher commercial impact."
The German carmaker also revealed on Tuesday that carbon dioxide emissions had been understated - leading it to underestimate the fuel consumption - and added 2 billion euros to its expected costs of the scandal.
The affair erupted in September when United States authorities exposed VW's use of "defeat devices" to cheat tests for emissions of smog-causing nitrogen oxide. VW admitted such software was installed in up to 11 million diesel vehicles worldwide.
VW's latest admission came after US environmental regulators said the carmaker had failed to inform it that similar devices were installed on larger 3 litre engines used in luxury sport utility vehicles from Porsche and Audi.
VW has denied this, but said on Tuesday it would immediately start talking to "responsible authorities" about what to do regarding the latest findings on fuel consumption and CO2 emissions.
"From the very start, I have pushed hard for the relentless and comprehensive clarification of events," VW chief executive Matthias Mueller said. "We will stop at nothing and nobody. This is a painful process but it is our only alternative."
The biggest business crisis in VW's 78-year history has wiped almost 24 billion euros - nearly a third - off the firm's stock market value, forced out long-time CEO Martin Winterkorn and rocked the auto industry, an important employer and source of export income in Germany.