VW emissions scandal widens to gas-fueled cars; DAX dips, Europe stocks higher

On Wednesday European stock-index futures were mostly in the green zone with only German DAX in the negative territory after the Volkswagen shares saw a grinding fall.

Volkswagen AG said its emissions-testing scandal has expanded beyond what was previously disclosed, now encompassing a broader set of infractions that could affect about 800,000 more cars and cost it at least an extra $2 billion.

The company's shares plunged 10% in the morning before recovering slightly. But the stock was still 5.12% in the red. Shares in rival carmakers BMW and Daimler have been both down today, along with tire maker Continental. Shares in France’s largest auto makers, Renault and Peugeot, both fell around 1%.

Over €4bn has been wiped off Volkswagen’s market capitalization this morning - which is twice the estimated ‘economic risk’ of the latest revelations.

The German carmaker said Tuesday it played down the level of carbon-dioxide emissions of the additional cars when providing information to regulators. Some of these vehicles were gasoline-fueled, moving the violations beyond the company’s diesel fleet for the first time.

Volkswagen revealed the mistake after conducting its own emissions tests. The report is a fresh hit after VW’s admission in September that up to 11 million diesel-powered cars world-wide could have so-called defeat devices that reduced tailpipe emissions of nitrogen oxides during laboratory testing.

An internal investigation started after VW said some diesel-powered cars of model years between 2009 and 2015 used software that allow them reduce nitrogen-oxide emissions during tests. U.S. and European authorities have begun regulatory and criminal probes.

Tuesday disclosure is the first to touch the greenhouse gas carbon dioxide, which has been a focus of both European and U.S. authorities over the past decade.

Since the first scandals in September, VW has reshuffled top management and suspended senior executives in charge of engine development. The new team is precisely examining the company’s entire fleet of automobiles.

The Financial Times has reminded how the VW saga has been developing:

The German benchmark DAX 30 dipped 0.10% on Wednesday, while other Europe traded in the green.

London's FTSE 100 added 1.07%, France's CAC 40 climbed 0.91% and Italy's FTSE MIB added 0.67%. Spain's IBEX 35 was up 1.18%.