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FRANKFURT — Martin Winterkorn was uncharacteristically subdued last week when, on the eve of the Frankfurt auto show, he stepped into a beam of blue light to show off the latest products from the Volkswagen empire.
The chief executive certainly knew what was coming days later: allegations that Volkswagen had cheated to pass emissions tests in the United States, touching off a scandal that has called his leadership into question and seriously damaged the automaker’s reputation.
Since the news broke on Friday, Volkswagen has scrambled to control the damage.
Mr. Winterkorn issued an apology on Sunday, saying the company had “broken the trust of our customers and the public.” Volkswagen said it would stop selling the remainder of its 2015 model Volkswagen and Audi diesels and not offer its 2016 diesel cars, which were just arriving in showrooms in the United States.
These measures did not stop Volkswagen shares from plummeting more than 20 percent when trading opened in Europe on Monday. Analysts say that Mr. Winterkorn will have to answer tough questions — including when he and other top executives at Volkswagen, which is known for being a tightly controlled, autocratic organization, first learned of the deception.
Continue reading the main storyQuestions like this will most likely be the focus of a meeting scheduled for Friday of Volkswagen’s supervisory board, which Mr. Winterkorn reports to.
The software used to manipulate emissions tests in the United States, and the extensive attempts by Volkswagen to deflect official scrutiny before admitting misconduct this month, suggest that the cheating was not just the work of a few rogue engineers.
“Either he knew, or he didn’t know, which is even worse,” said Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen who is a longtime Volkswagen critic. “Any politician in his situation would have to resign.”
White House Reacts to VW Test Rigging
Josh Earnest, the White House press secretary, said the administration was “quite concerned” about reports that Volkswagen flouted emissions regulations.
By THE ASSOCIATED PRESS on Publish Date September 22, 2015. Photo by Associated Press. Watch in Times Video »German authorities said on Monday that they would conduct their own tests to make sure that Volkswagen diesels were complying with European laws.
The European Commission, the administrative arm of the European Union, has contacted Volkswagen as well as the Environmental Protection Agency for details, a commission spokeswoman said.
Volkswagen did not respond to a request for comment.
Volkswagen — whose brands besides Audi include Porsche, Bentley and Lamborghini — recently edged Toyota to become the world’s top seller of automobiles. But it has struggled to build a following in the United States.
It has made huge investments in the U.S. market in recent years, including building a major assembly plant in Tennessee. The company is also building a plant in Mexico to make Audi sport utility vehicles primarily for American consumers.
Yet the company has not gained much traction. Its share of the U.S. market has been stuck at about 2 percent, and the new revelations will probably undercut its effort to lure American consumers, in part by promoting “clean” diesel engines that were supposed to be more fuel-efficient than gasoline engines, yet also peppy and environmentally responsible.
“I feel like I was misled,” said Tony German, a health care administrator in Austin, Tex., who owns a 2010 diesel Audi A3, one of the cars affected by the E.P.A. action. “VW has been successful in promoting their high-mileage, clean diesel engines — and now they are telling us they are neither.”
“This is proactive deception,” Mr. German said by phone. “You can’t blame the low person on the totem pole for this.”
Fitch Ratings said the E.P.A. action, and the prospect of billions of dollars in penalties, could affect Volkswagen’s debt rating, even though the automaker has ample financial resources. The accusations “could seriously undermine the group’s brand image, particularly in the U.S., where Volkswagen is already struggling to increase its market share,” Fitch said in a statement Monday.
Several United States law firms announced plans to sue on behalf of consumers who said Volkswagen deceived them into believing they were buying environmentally friendly vehicles. Volkswagen owners could also claim the resale values of their vehicles have been damaged by the affair.
It is possible to reduce the amount of nitrogen oxide — a gas that is a major contributor to smog and is linked to respiratory ailments including asthma, emphysema and bronchitis — emitted by diesel engines. But the technology used by Volkswagen also reduced fuel economy and performance.
The software installed by Volkswagen on vehicles sold in the United States sidestepped this trade-off by giving a misleadingly low nitrogen-oxide reading during tests.
The software measured factors like the position of the steering wheel, the vehicle’s speed and even barometric pressure to sense when the car was being tested, the E.P.A. said. The car’s engine then configured itself to reduce emissions of nitrogen oxide.
Volkswagen will be required to recall nearly half a million vehicles in the United States to fix the illegal software, the E.P.A. says.
More than half of all vehicles sold in Europe are diesels. They are popular because they typically offer better fuel economy than gasoline. For years, the E.U. put a priority on fuel economy rather than emissions and set standards for the engines that were much more lax than in the United States.
Stock Market Reaction to Volkswagen
Pollution rules in Europe have been progressively tightened. The most recent standard, known as Euro 6, took effect on Sept. 1 for all new cars sold; United States standards are still considered more stringent.
E.U. officials have recognized that laboratory testing of diesel-vehicle emissions is flawed. A new procedure that’s intended to better replicate road conditions is scheduled to go into effect on Jan. 1.
If there is any consolation for Volkswagen, it might be that diesel-powered cars account for only a tiny fraction of sales in its largest market, China.
And while Volkswagen’s reputation has probably been damaged, its most profitable vehicles in the United States are Porsche sports cars — none of which are affected by the E.P.A. action — and Audi cars, only one model of which is affected.
The Volkswagen cars affected are Golf, Jetta, Beetle and Passat models from 2009 through 2015 that are equipped with two-liter diesel engines.
The plunge in Volkswagen shares, which closed down more than 17 percent on Monday, was a clear indication that investors thought that its profit and sales could suffer because of the E.P.A. accusations.
Yet, Volkswagen is relatively immune to stock market pressure because only 12 percent of its voting shares are traded. Porsche Automobil Holding, controlled by members of the Porsche family, holds a slight majority. The German state of Lower Saxony owns 20 percent, and the sovereign wealth fund of Qatar owns 17 percent.
Stephan Weil, the prime minister of Lower Saxony, where Volkswagen has its headquarters, said in a statement on Monday, “Manipulation of an emissions test is completely unacceptable and without any justification.”
But Mr. Weil, who is also a member of the Volkswagen supervisory board, said consequences could be discussed only after a thorough investigation.
An earlier version of this article misstated, in one instance, the likely effects of repairs to affected vehicles. As the article noted elsewhere, the repairs are likely to increase fuel consumption, not reduce it.
