LONDON (Sept. 22, 2015) — Volkswagen said Tuesday it was forced to set aside $7.3 billion to cover the cost of a rapidly widening scandal over its emissions technology — adding that the problem could be vastly greater than previously believed.
It added that it has been forced to tear up its profit forecast for the year.
The German company said it was setting aside 6.5 billion euro to cover recalls and other “efforts to win back the trust of our customers.” That figure could rise further as investigations continue.
Shares in Volkswagen plunged another 20% Tuesday, after crashing 17% Monday.
That means more than a quarter of the value of the company has been wiped out since Friday when U.S. regulators revealed that the company had cheated in emissions tests on about 500,000 vehicles.
And the scandal keeps growing. Volkswagen said Tuesday internal investigations had found that some 11 million vehicles worldwide showed a noticeable deviation in emissions between test results and road use.
“The company is therefore in contact with the relevant authorities and the German Federal Motor Transport Authority,” Volkswagen said.
Michael Horn, the head of Volkswagen in the U.S., admitted late Monday that the company had “totally screwed up.”
“Let’s be clear about this, our company was dishonest with the [Environmental Protection Agency], and the California air resources board, and with all of you,” Horn said.
“In my German words, we have totally screwed up.”
Regulators in the U.S. said Volkswagen cheated on environmental standards by programming engine management software in some diesel cars to turn on emission controls only when being tested. Cars equipped with the device would run up to 40 times more emissions when on the road, the EPA said.
Regulators have ordered Volkswagen to recall the vehicles and the company said it was halting sales of some cars in the U.S.
The models affected include the VW Jetta, Beetle and Golf from 2009 through 2015, the Passat from 2014-2015 as well as the Audi A3, model years 2009-2015. Owners of the “CleanDiesel” automobiles have filed a class action lawsuit against Volkswagen.
“We must fix those cars and prevent this from ever happening again and we have to make things right with the government, the public, our customers, our employees and also very important, our dealers,” Horn said.
Volkswagen CEO Martin Winterkorn, who survived an attempt to oust him from his position earlier this year, apologized to customers on Sunday for breaking their trust.
He faces a supervisory board meeting later this week, which will decide whether to renew his contract until 2018.
The scandal dragged down other European carmakers on fear the scandal could affect the wider industry. Daimler, the maker of Mercedes-Benz, was down 4.6% on Tuesday, while BMW lost 5.2%. Both companies said the issue is not affecting their cars.