DETROIT - Volkswagen AG's smog-test scandal escalated Tuesday as the company acknowledged putting stealth software in millions of vehicles worldwide. The crisis has already cost VW more than 24 billion euros ($26 billion) in stock market value.
The world's top-selling carmaker now admits that 11 million of its diesel vehicles contain software that evades emissions controls, far more than the 482,000 identified by the U.S. Environmental Protection Agency as violating clean air laws.
Volkswagen set aside an initial 6.5 billion euros ($7.3 billion) to cover the fallout and "win back the trust" of customers. It also said this year's profit projections will change, and warned that future costs remain undetermined.
CEO Martin Winterkorn apologized for the deception under his leadership and pledged a fast and thorough investigation, but gave no indication that he might resign.
"Millions of people across the world trust our brands, our cars, and our technologies," Winterkorn said Tuesday in a video message. "I am endlessly sorry that we have disappointed this trust. I apologize in every way to our customers, to authorities, and the whole public for the wrongdoing.
"We are asking, I am asking, for your trust on our way forward," he said.
That may be a tall order for people who bought "clean diesel" VWs thinking they could get peppy rides but still be environmentally friendly.
VW has yet to explain who installed the software, under what direction, and why.
"I do not have the answers to all the questions at this point myself, but we are in the process of clearing up the background relentlessly," Winterkorn said.
The EPA said Friday that VW faces potential fines of $37,500 per vehicle, and that anyone found personally responsible is subject to $3,750 per violation.
In theory, the penalties could total $18 billion or more, although companies rarely pay maximum fines in the United States.
"I don't think this is a life-threatening event, but it's clear it's going to be very expensive," said Christian Stadler, who teaches strategic management at the Warwick Business School.
Volkswagen blamed unrelated issues for more than a year while the EPA and California regulators asked why its cars were running much dirtier on the road. The agencies refused to approve 2016 models without an answer.
Only then did VW acknowledge that the software switches its engines to a cleaner mode during official emissions testing. The "defeat device" then switches off again, giving the cars more power while emitting as much as 40 times the legal pollution limit during actual driving, the EPA said.
"Let's be clear about this. Our company was dishonest. With the EPA, and the California Air Resources Board, and with all of you. And in my German words, we have totally screwed up," the head of Volkswagen's U.S. division, Michael Horn, said Monday while unveiling a new Passat model in New York.
The company has not revealed the results of internal investigations, beyond announcing the much wider impact on Tuesday.
"I hope that the facts will be put on the table as quickly as possible," German Chancellor Angela Merkel said in Berlin.
Peggy Schaeffer, a librarian from Durham, N.C., who bought her diesel Jetta Sportwagen in 2010, was dismayed to know that during a recent cross-country trip, she was "polluting all the way." And if Volkswagen's eventual repair diminishes her car's sportiness or fuel efficiency, she's not sure she wants it.
"I really feel like I've been had. I've been hoodwinked. This is deliberate fraud and deceit," she said.
Auto Industry Scandals
With Volkswagen's admission that 11 million of its diesel vehicles worldwide contain software that can rig emissions tests, the German automaker joins a list of auto industry scandals that spans several decades.
At least 27 people died during the 1970s because of the faulty position of fuel tanks in the Ford Pinto. In some cases, the fuel tank burst into flames after a rear-end collision. Ford recalled more than 1.5 million Pintos in 1978.
About 6.5 million Firestone tires were recalled in 2000 because the tires could shred, blow out, or fail. Most of the tires were used in Ford SUVs and light pickup trucks. The National Highway Traffic Safety Administration said in 2001 that it received 271 reports of deaths and 800 injuries related to the faulty tires.
Toyota agreed to pay $1.2 billion in a settlement last year, admitting that it hid information about defects that caused Toyota and Lexus vehicles to accelerate unexpectedly. Toyota recalled more than 10 million vehicles, starting in 2009, for several issues, including faulty brakes, sticky gas pedals, and problematic floor mats.
The automaker's faulty ignition switches have been linked to at least 169 deaths. The switch could slip out of the run position and turn the engine off while driving. Last week, GM agreed to pay $900 million to settle a criminal investigation over the ignition issue. GM has admitted that some employees knew about the problem for nearly a decade, yet cars equipped with the switch were not recalled until last year.
Takata air bags
According to the latest figures from federal regulators, approximately 23.4 million driver and passenger Takata air bags on 19.2 million vehicles are being recalled and need to be replaced. The air bags can inflate too quickly and explode, sending metal shrapnel into drivers and passengers. The air bags, which were used in several vehicles, are blamed for causing seven deaths in the U.S.
SOURCE: Associated Press