German auto giant Volkswagen's shares plummeted nearly 20 percent today as investigations spread into revelations that hundreds of thousands of its diesel cars have software that secretly thwarts US pollution tests.
Volkswagen, the world's largest automaker by sales in the first half of this year, said it had halted all diesel vehicle sales in the United States during a probe into the scandal, which could lead to fines of more than USD 18 billion (16 billion euros).
It is not known how far the manipulation extended.
In Germany, which is hosting the Frankfurt motor show vaunting the industry's strengths and environmental credentials, the government launched an investigation into whether Volkswagen or other carmakers are doing anything similar in Germany or Europe.
Transport Minister Alexander Dobrindt told the Bild daily that he had asked Germany's Federal Motor Transport Authority "to immediately have specific and extensive tests conducted on all Volkswagen diesel models by independent experts".
South Korea's Yonhap news agency said the authorities there, too, would conduct emissions tests on three Volkswagen car models in mid-October to check for similar deception.
Beyond the fines and lawsuits, and the billions of euros that evaporated in Volkswagen's stock market value as its shares plunged 17.14 percent to 133.70 euros, the company faces a potentially crippling blow to its reputation.
According to the US authorities, VW equipped 482,000 cars in the US with sophisticated software that discreetly turns off pollution controls when driving normally and secretly turns them on only when it detects that the car is undergoing an emissions test.
This allows the car to pass the emissions test, earning a certificate of good environmental performance.
Once the test is over, the mechanism de-activates itself, releasing pollutant gases into the air, such as nitrogen oxides that are linked to severe respiratory ailments including asthma.
"Using a defeat device in cars to evade clean air standards is illegal and a threat to public health," said Cynthia Giles, enforcement officer at the US Environment Protection Agency (EPA), describing the allegations as "very serious matters".
