The scandal that has undermined Germany's Volkswagen in the United States spread to its core market of Europe on Tuesday, after the company admitted that eleven million of its diesel cars worldwide were equipped with software that was used to cheat on emissions tests in the US.
Volkswagen did not provide information on where the affected cars are, but the overwhelming majority are probably in Europe, where the company dominates the market and accounts for more than one of every four cars sold.
The German automaker said it was setting aside the equivalent of half a year’s profits, 6.5 billion Euros, or about $7.3 billion, to cover the cost of fixing the cars to comply with pollution standards and to cover other expenses, which are likely to include fines as well as responses to civil lawsuits from angry customers.
The carmaker’s statement was its first admission that diesel cars outside the United States may contain the software that led the Environmental Protection Agency to accuse the company of deliberately evading pollution tests. Previously, Volkswagen acknowledged only that the problem affected nearly 500,000 vehicles in the United States.
On Tuesday afternoon, Volkswagen’s embattled CEO Martin Winterkorn, released a video statement in which he said the company would work with government authorities to investigate the matter. “Everything will be laid on the table, as quickly, thoroughly and transparently as possible’’ Winterkorn said. “And, to be clear, manipulation and Volkswagen — this must never happen again.’’
The tampered vehicles use what is known as Type EA 189 engines, which are 2-liter engines. The company said on Tuesday that “a noticeable deviation between bench-test results and actual road use was established” for the engines.
Volkswagen said it would also make “other efforts to win back the trust of our customers.”
The number of cars involved suggests that the scale of the damage to Volkswagen’s reputation and its financial standing may be even greater than thought.
Josh Earnest, the White House press secretary, said the administration was “quite concerned” about reports that Volkswagen flouted emissions regulations.
Volkswagen shares fell by nearly 18% through late-afternoon trading in Frankfurt on Tuesday, after falling by 16% on Monday.
The diesel cars were programmed to sense when emissions were being tested and to turn on equipment that reduced emissions, according to United States officials. At other times, the cars had better fuel economy and performance, but produced as much as 40 times the allowed amount of nitrogen oxide, a pollutant that can contribute to respiratory problems including asthma, bronchitis and emphysema.
It is not clear, though, how fully Volkswagen might be able to correct the problem on the 11 million vehicles. The company could presumably alter the engines, so that the cars on the road begin actually meeting the required emissions standards. But doing so would probably degrade the vehicles’ fuel economy and performance, and might cause the engines to wear out sooner.
The E.P.A. has said it will ask Volkswagen to recall almost a half-million vehicles sold in the United States from 2009 to 2015. The affected Golf, Passat, Jetta and Beetle cars were equipped with 2-liter diesel engines. Some Audi models also use the same diesel engine. Volkswagen has halted sales of cars with the engines in the United States.