What is Volkswagen accused of?
It's been dubbed the "diesel dupe". The German car giant has admitted cheating emissions tests in the US. According to the Environmental Protection Agency (EPA), some cars being sold in America had devices in diesel engines that could detect when they were being tested, changing the performance accordingly to improve results.
VW has had a major push to sell diesel cars in the US, backed by a huge marketing campaign trumpeting its cars' low emissions. The EPA's findings cover 482,000 cars in the US only, including the VW-manufactured Audi A3, and the VW brands Jetta, Beetle, Golf and Passat. But VW has admitted that about 11 million cars worldwide are fitted with the so-called "defeat device"....
...With VW recalling almost 500,000 cars in the US alone, it has set aside €6.5bn (£4.7bn) to cover costs. But that's unlikely to be the end of the financial impact. The EPA has the power to fine a company up to $37,500 for each vehicle that breaches standards - a maximum fine of about $18bn.
Legal action from consumers and shareholders may follow, and there is speculation that the US Justice Department will launch a criminal probe....
...However, with about 11 million VW diesel cars potentially affected, further costly recalls and refits are possible. Half of the company's sales in Europe - VW's biggest market - are for diesel cars. No wonder the carmaker's shares plunged around 30% in the first couple of days after the scandal broke - with other carmakers also seeing big falls in their stock prices.
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