VW recalls 8.5 mn cars in 28 EU countries over dieselgate scandal

Volkswagen (VW) today said that it is recalling 8.5 million diesel vehicles in 28 European countries just days after the Italian police raided the car maker's office in Verona and its sports car unit Lamborghini's office in Bologna in the wake of the global pollution-cheating scandal.

The massive recall in all 28 of the EU's member states, including some 2.4 million vehicles in Germany, would begin in January 2016, VW said in a statement.

Apart from Germany, more than one million would be recalled in Britain, nearly a million in France and around 117 000 vehicles in Portugal.

The German regulator, Federal Motor Transport Authority, ordered the recall and said that it would keep an eye on the massive recall across the country and ensure that it is carried out.

VW said, "Volkswagen welcomes the swift decision by the Federal Motor Transport Authority (KBA) to implement the timetable and plan of measures submitted last week by issuing a recall.

"This decision gives customers clarity with regard to the continued unrestricted use of the vehicles.''

The German car maker has been  caught in the biggest scandal in its history after it was revealed in mid-September that it used software that allowed it to manipulate emission results for its diesel cars.

Volkswagen admitted that 11 million vehicles worldwide could have been fitted with software (now nicknamed ''Defeat Devise'') that misled regulators.

The software enabled switching on of fume-suppression technology during emission control testing, which allowed cars to pass stringent environmental checks, while letting the vehicle emit dangerous levels of nitrogen oxides on the road.

Because of the manipulation, it remained hidden that the emission levels of diesel cars were 40 times higher than the level of pollutants allowed in the US, Europe, and other countries.

VW has already set aside €6.5 billion to cover the costs of the scandal, but some experts believe the final bill will be much higher.

Estimates from Credit Suisse peg the costs of the scam, dubbed Dieselgate, at as much as a whopping $87 billion, three  times more than the estimated $20 billion that British oil major BP incurred in the worst oil spill in the Deepwater Horizon disaster that occurred offshore US in 2010.

Credit Suisse's worst-case scenario estimate includes costs related to owner reimbursements, civil-criminal cases, fixing the emission issue, and compensation for the 'loss of value' to the owners of the affected diesel cars, which itself could cost around $37 billion.

Italian police had raided VW offices in Verona and Lamborghini offices in Bologna related to a commercial fraud and put six executives under investigation.

The raids came after Italian consumer rights group Codacons filed a fraud suit on behalf of 12,000 Italian owners of VW-made vehicles on allegations that VW committed fraud at the expense of consumers.

VW shares have already collapsed by more than 35 per cent since the scandal broke and many countries, including India have temporarily halted the sale of VW diesel cars.