Germany’s transport ministry has said Volkswagen is likely to need to make more than just software changes to nearly a quarter of its 2.4m diesel cars being recalled in the country as a result of the emissions scandal.
The ministry told the Associated Press on Monday that of the vehicles being recalled for fixes in Germany, the Federal Motor Transport Authority “currently expects that approximately 540,000 will also need hardware changes”. It said Volkswagen would inform owners of the details.
VW has admitted that around 11m vehicles worldwide are fitted with software that turns on pollution controls during government tests and shuts them off on the road.
The company is recalling 8.5m 2009-2015 models fitted with the software across Europe, starting next year, including the 2.4m in Germany. US officials say Volkswagen programmed the software into diesel engines on 482,000 cars.
VW is also expected to announce how it will compensate US customers on Monday. A dealer familiar with Volkswagen’s plans told AP that the carmaker intends to offer $1,000 (£660) in gift cards and vouchers to owners of smaller diesel cars.
The offers would be a gesture of goodwill to owners with 2-litre four-cylinder diesel engines that have been implicated in the emissions cheating scandal. The dealer said owners would get a $500 Visa debit card to spend on anything they wish and a $500 voucher for oil changes, service or merchandise from dealers.
Germany’s consumers association wants Volkswagen to offer vouchers as compensation to German customers affected, AFP reported. “The group must assume its responsibilities,” said Klaus Mueller, president of the Federation of the Associations of Protection for Consumers, in an interview with the Rheinische Post newspaper on Monday. “A voucher is the minimum that the company can give to compensate affected consumers,” he added.
VW confirmed that it was offering vouchers to customers in the US and Canada, without giving details of the sums involved. A spokesman said the company was developing “an individual package for each market”, and that for Germany consultations were ongoing with the authorities.
In a further blow to the German carmaker, its credit rating was downgraded from A to BBB+ by Fitch on Monday in the wake of the emissions scandal, which has wiped billions off its share price and could eventually cost the company €35bn, according to analysts.
“Fitch already incorporated the group’s relatively weak corporate governance in its ratings but we believe that the emergence of a fraud of this magnitude, going either unnoticed or uncorrected by top management for so long, is not consistent with a rating in the A category,” the ratings agency said.
“Volkswagen’s recent admission that it understated carbon dioxide emissions on 800,000 vehicles reinforces this view and highlights the fundamental issue of internal control failure within the group.
“The downgrade also reflects the expected direct and indirect financial effects from this crisis including recall costs, fines, lawsuits and legal claims worldwide as well as lost sales and revenue and probable discounts on vehicle sales. We believe that Volkswagen’s credit metrics are solid for the ratings and can absorb several billions euros of extraordinary cash outflow, particularly as we expect fines and legal claims to be spread over a few years.”
On Monday Greenpeace environmental activists protested outside the main entrance of VW’s headquarters in Wolfsburg, unfurling a banner reading “Das Problem”, a play on the firm’s marketing slogan “Das Auto”.
The protesters also held a C and a 2 on either side of the round VW logo at the factory entrance, spelling out “CO2”.