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VW sets aside $7.3B war chest for diesel scandal fallout

The crisis enveloping Volkswagen AG, the world's top-selling carmaker, escalated Tuesday as the company issued a profit warning following a stunning admission that some 11 million of its diesel vehicles worldwide were fitted with software at the center of a US emissions scandal. The German company said it was setting aside around 6.5 billion euros ($7.3 billion) to cover the fallout from the scandal that has tarnished VW's reputation, raised questions over the future of CEO Martin Winterkorn and battered its share price. The reputational damage to Volkswagen is implicit in the market's response. Volkswagen's share price slid a further 16.2 percent Tuesday to a near four-year low of 112 euros. The fall comes on top of Monday's 17 percent decline. The shockwaves from the scandal enveloping Volkswagen were being felt far and wide across the sector as traders wondered who else may get embroiled. Germany's Daimler AG, the maker of Mercedes-Benz cars, was down 6.5 percent, while BMW AG fell 5.4 percent. France's Renault SA was seven percent lower. The scandal is hugely damaging to a business that relies heavily on a hard-won reputation for quality and trustworthiness. "Brands are all about trust and it takes years and years to develop. But in the space of 24 hours, Volkswagen has gone from one people could trust to one people don't know what to think of," said Nigel Currie, an independent UK-based sponsorship and branding consultant. The trigger to the company's market woes was last Friday's revelation from the US's Environmental Protection Agency that VW rigged nearly half a million cars to defeat US smog tests. The company then admitted that it intentionally installed software programmed to switch engines to a cleaner mode during official emissions testing. The software then switches off again, enabling cars to drive more powerfully on the road while emitting as much as 40 times the legal pollution limit. "We have totally screwed up." - Michael Horn "In my German words: we have totally screwed up," the head of Volkswagen's US division, Michael Horn, told an audience in New York on Monday. In its statement Tuesday, Volkswagen gave more details, admitting that there were "discrepancies" related to vehicles with Type EA 189 engines and involving some 11 million vehicles worldwide. The number of vehicles involved is more than the 10 million or so cars it sold in 2014.

Autoblog Minute: VW CEO Winterkorn out, rebuilding begins

Martin Winterkorn steps down as CEO of Volkswagen. Autoblog's Eddie Sabatini reports on this edition of Autoblog Minute, with commentary from Autoblog's Editor-in-Chief, Mike Austin. Show full video transcript text [00:00:00] Dr. Martin Winterkorn steps down as CEO of Volkswagen. I'm Eddie Sabatini and this is your Autoblog Minute. Dr. Winterkorn resigns in the wake of the VW emissions scandal. In a statement released to the press Dr. Winterkorn had this to say: "I am shocked by the events of the past few days. Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group... [00:00:30] I am doing this in the interests of the company even though I am not aware of any wrongdoing on my part..." For more on what Winterkorn's resignation means for Volkswagen and the industry at large we go to Autoblog's Editor-in-chief, Mike Austin: [00:01:00] [Mike Austin Interview] The investigation into Volkswagen is ongoing and Autoblog will continue to cover the story as it develops. [00:01:30] For Autoblog, I'm Eddie Sabatini. Autoblog Minute is a short-form video news series reporting on all things automotive. Each segment offers a quick and clear picture of what's happening in the automotive industry from the perspective of Autoblog's expert editorial staff, auto executives, and industry professionals.

Volkswagen Group recalls 281,505 VWs and Audis for fuel leaks

The Basics: Volkswagen Group is recalling 281,505 total Volkswagen and Audi brand products in the United States for potential fuel leaks. Certain versions of the Audi A3, A6, A7, Q5, and Q7 are affected. In addition, some versions of the Volkswagen Golf, Golf SportWagen, and Golf GTI fall under the recall. It's unclear if vehicles outside of the United States will be recalled as well. The Problem: There are actually three separate recalls for three separate issues that all pertain to leaky fuel. All three recalls were issued simultaneously. The risk of unintended ignition is the main concern here. First off, 2012-2013 Audi A6 and Audi A7 models [28,249 cars] are being recalled because of a degrading fuel hose in the engine compartment. Secondly, 143,214 gas-powered 2009-2012 Audi Q5s and 2007-2012 Audi Q7s are being recalled. The fuel cap may crack on these vehicles, leaking fuel. Finally, 110,042 total units of the 2015-2016 Volkswagen Golf, Golf SportWagen, GTI, Audi A3 sedan, and A3 Cabriolet will be recalled because of fuel leaking from the evaporative emissions system. Injuries/Deaths: According to Reuters, Volkswagen has reported no injuries or deaths related to the fuel leaks. In addition, the company has said there have been no fires started due to the leaks. The Fix: Three separate issues means three separate fixes. Volkswagen and Audi will be reaching out to customers soon, though the parts aren't yet available. For the A6 and A7, Audi will simply replace the under hood hose. For the Q5 and Q7, dealers will clean the pump flange and install a butyl rubber band to protect the pump. Finally, the affected Golf and A3 models will have the suction cup in the emissions system replaced. If you own one: Volkswagen and Audi will begin contacting owners starting next month regarding a fix. Related Video: News Source: NHTSA, Reuters Recalls Audi Volkswagen