The British government is to start its own inquiry into car emissions and testing, running new lab tests on engines from across the industry and comparing the results with on-the-road emissions.
The Vehicle Certification Agency, a division of the Department for Transport, will work with manufacturers across the industry as it reruns tests in the wake of the VW test-rigging scandal. The government also called on the European commission to launch a Europe-wide investigation into the car industry.
The transport secretary, Patrick McLoughlin, said: “The government takes the unacceptable actions of VW extremely seriously. My priority is to protect the public as we go through the process of investigating what went wrong and what we can do to stop it happening again in the future.
“We have called on the EU to conduct a Europe-wide investigation into whether there is evidence that cars here have been fitted with defeat devices. In the meantime we are taking robust action.”
France and Italy also announced action in the wake of the VW scandal, including random tests on cars to check if they had also been fitted with software designed to cheat official testing.
The German stock market closed down 1.9% last night, hit by further concerns about the country’s car manufacturers. BMW shares lost more than 5% after a report that some of its diesel cars had exceeded emissions standards in tests, although the company said it was unaware of the tests mentioned. Daimler shares lost more than 4% while tyre firm Continental dipped more than 3% on fears that car sales could be hit.
ING chief economist Carsten Brzeski warned the Volkswagen scandal could become the biggest threat to German economic growth, if consumers lose faith in its cars. He said: “All of a sudden, Volkswagen has become a bigger downside risk for the German economy than the Greek debt crisis.
“If Volkswagen’s sales were to plunge in North America in the coming months, this would not only have an impact on the company, but on the German economy as a whole.”
Volkswagen is expected to announce further changes to its senior management on Friday. Reuters reported that the research and development chiefs at Audi and Porsche are expected to leave, along with Michael Horn, VW’s US chief. Horn said earlier this week that VW had “totally screwed up” over the emissions scandal.
Porsche boss Matthias Müller is expected to be named as the new boss of VW following the departure of Martin Winterkorn on Wednesday. Winterkorn, meanwhile, is expected to qualify for a €1m (£740,000) annual pension and could also be in line for a €3.2m payoff. Winterkorn’s salary of €1.6m was topped up to nearly €16m last year as a result of bonuses and loyalty payments.
Pressure had been growing on the UK government to take action, with the transport select committee calling on McLoughlin to explain his position. The committee of MPs is ready to launch its own inquiry into the VW scandal and its wider lessons for testing. It is likely to summon ministers and VW executives in Britain for questioning.
Louise Ellman, committee chair, said: “I’m glad that [McLoughlin] is taking action – but it’s only a start. There are severe question marks against the independence of the testing system. Action must be taken to give the public confidence in the regime.”
The environmental law organisation ClientEarth, which earlier this year won a supreme court ruling that the UK was in breach of its obligations to ensure compliance with nitrogen dioxide, has written to the DfT to release all information held on the true emissions performance of cars licensed for sale on UK roads. It warned that the scandal gave serious concerns over implications for air quality in the UK, and accused the government of failing to take appropriate action to investigate the situation.
Alan Andrews, air pollution lawyer at ClientEarth, welcomed what he termed the DfT’s “humiliating U-turn”, but added: “We are still concerned testing could be carried out by the Vehicle Certification Agency - a government agency which gets funding from the motor industry.
“We will be seeking reassurances that any investigation is quick, independent and 100% transparent.”
Concerns over true pollution levels have also spread to fuel consumption, with the consumer group Which? having long reported discrepancies between official miles per gallon test figures and its own results, with the VW Golf being the second-worst offender in its research.
The German car giant could soon face a raft of claims from British car owners, according to top law firms.
Several firms reported a rush of inquiries from drivers who may seek compensation after paying a premium price for a cleaner vehicle, before the German carmaker admitted installing software to cheat emissions tests.
Bozena Michalowska-Howells, a lawyer at Leigh Day said: “If it emerges that these cars in the UK passed tests because of this software then this is not only a breach of contract but a flagrant breach of EU emissions regulations.
“In the last two days we have been inundated by Volkswagen owners who bought these vehicles specifically because of their alleged reduced fuel emissions and who are outraged by the company’s actions. They are looking to form a group action.”
The likelihood of claims was heightened on Thursday when the German transport minister, Alexander Dobrindt, confirmed that Volkswagen vehicles containing such defeat devices were sold across Europe.
Shareholders in VW are also likely to have a strong legal case against the management, law firms said, after the 30% fall in its share price since the scandal erupted.
VW has put aside an initial €6.5bn (£4.8bn) to deal with the costs of the crisis, although that sum could be dwarfed by fines from US regulators. The carmaker has enlisted Kirkland & Ellis – the US law firm employed by BP during the Deepwater Horizon oil disaster – to deal with its mounting legal claims, as well as possible criminal investigations in the US.
