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VW shares sink again as scandal takes on new dimension

A Volkswagen logo stands on the roof of the company’s headquarters in Wolfsburg, Germany. Photo: Axel Schmidt/Reuters

A Volkswagen logo stands on the roof of the company’s headquarters in Wolfsburg, Germany. Photo: Axel Schmidt/Reuters

Investors wiped another €3 billion off Volkswagen’s market value yesterday after it said it had understated the fuel consumption of some cars, opening a new front in a scandal that initially centred on rigging emissions tests.

The carmaker said late on Tuesday it had understated the fuel usage of up to 800,000 cars in Europe, meaning those vehicles affected are more costly to drive than their buyers had been led to believe.

The revelations – which added a new dimension to a crisis that had previously focused on environmental damage – are the first to threaten to make a serious dent in VW’s car sales since the scandal erupted, analysts said.

They could potentially deter cost-conscious consumers who have so far taken VW’s manipulation of smog-causing emission tests in their stride. The effects of the scandal have so far been barely reflected in VW sales figures, although it was the only German carmaker to report a decline in car registrations in Germany in October.

Shares in Europe’s biggest carmaker were down 8.6 per cent at €101.45 by 1003 GMT.

“Another week, another shock in the VW story,” Exane BNP Paribas analyst Stuart Pearson wrote in a note. “We add another €4 billion in recall costs and fear a harsher commercial impact,” said Mr Pearson, who rates VW “neutral”.

The German carmaker also revealed that carbon-dioxide emissions had been understated, leading it to underestimate the fuel consumption, and added €2 billion to its expected costs of the scandal.

The affair erupted in September when US authorities exposed VW’s use of “defeat devices” to cheat tests for emissions of smog-causing nitrogen oxide. VW admitted such software was installed in up to 11 million diesel vehicles worldwide.

VW’s latest admission came after US environmental regulators said the carmaker had failed to inform it that similar devices were installed on larger 3.0 litre engines used in luxury sport utility vehicles from Porsche and Audi.

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