The company said initial estimates suggested the latest revelation could cost it 2 billion euros (USD 2.2 billion), but "a reliable assessment of the scale of these irregularities is not yet possible".
Among engines hit are 1.4, 1.6 and 2.0 litre motors of VW, Skoda, Audi and Seat vehicles, said a VW spokesman, adding that CO2 levels indicated for these cars had been lower than actual emissions.
Volkswagen's admission in September that it had fitted 11 million of its diesel vehicles with devices designed to cheat official pollution tests -- revelations that have sparked global outrage and investigations across the globe.
The so-called defeat devices turn on pollution controls when cars are undergoing tests and off when they are back on the road, allowing them to spew out harmful levels of nitrogen oxide.
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The latest issue opens up another front in the scandal engulfing the company as it relates to another type of engine and emissions, and comes a day after US authorities accused it of fitting the nitrogen oxide defeat devices also on its larger 3.0 litre diesel vehicles -- charges VW adamantly denied.
"We will stop at nothing. It is a painful process but we have no choice," he said.
"The Volkswagen executive board regrets the facts established," he said of the internal probe that uncovered CO2 irregularities, adding that the company will ensure that the correct emissions level are indicated following consultations with the authorities.
In the United States, authorities yesterday accused VW of fitting illegal "defeat devices" not only on its smaller engines, but also into various six-cylinder 3.0 litre diesel VW Touareg, Porsche Cayenne and Audis.