Frankfurt, September 21

German auto giant Volkswagen (VW)plummeted more than 20 per cent on the stock market today as investigations spread into revelations that hundreds of thousands of its diesel cars have software that secretly thwarts US emissions tests.

VW, the world’s largest automaker by sales in the first half of this year, said it had halted all diesel vehicle sales in the United States during a probe into the scandal, which could lead to fines of more than $18 billion.

It is not known how far the manipulation extended.

In Germany, which is hosting the Frankfurt motor show to vaunt the industry’s strengths and environmental credentials, the government launched an investigation into whether Volkswagen or other car markers are doing anything similar in Germany or Europe.

South Korea’s Yonhap news agency said the authorities there, too, will conduct emissions tests on three Volkswagen car models in mid-October to check for similar deception.

Beyond the fines and lawsuits, and the billions of euros that evaporated in Volkswagen’s stock market value a few hours of trade in Frankfurt, the company faces a potentially crippling blow to its reputation.

According to the US authorities, VW equipped 482,000 cars in the US with sophisticated software that discretely turns off emissions controls when driving normally and secretly turns them on only when it detects that the car is undergoing an emissions test.

This allows the car to pass the emissions test, earning a certificate of good environmental performance.

Once the test is over, the mechanism de-activates itself, releasing pollutant gases into the air, such as nitrogen oxides that are linked to severe respiratory ailments, including asthma.

“Using a defeat device in cars to evade clean air standards is illegal and a threat to public health,” said Cynthia Giles, enforcement officer at the US Environment Protection Agency (EPA), describing the allegations as ‘very serious matters’.

VW Chief Executive Martin Winterkorn issued an apology on Sunday, vowing that the group would cooperate with authorities and ordering an external investigation of its own into the matter.

“The board of management takes these findings very seriously. I personally am deeply sorry that we have broken the trust of our customers and the public. We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly and completely establish all of the facts of this case,” Winterkorn said.

“We at Volkswagen will do everything that must be done in order to re-establish the trust that so many people have placed in us, and we will do everything necessary in order to reverse the damage this has caused. This matter has first priority for me, personally, and for our entire board of management,” Winterkorn said.

A non-governmental group, the International Council on Clean Transportation, said it uncovered the deception through ‘dogged’ perseverance and then alerted researchers at the University of West Virginia.