Volkswagen shares slammed into reverse amid VW emissions cheating scandal

Shares in Volkswagen have crashed more than 13% as investors reacted to VW’s admission that it had been fiddling official US emissions tests.

The company could face an $18 billion (£11.5 billion) fine after US regulators announced on Friday that VW had admitted it had fitted software to its cars that detected when they were in laboratory test conditions, and switched on emissions reduction technology to flatter the result.

When the software detected the car was back on the road, the devices were switched off.

Emissions then returned to their “normal” levels, which were as much as 40% above the legal maximum, the US Environmental Protection Agency said.

VW’s chief executive Martin Winterkorn has made a fulsome apology for the company’s behaviour and begun an external, independent review into the company’s practices.

Some experts believe such test “cheating” is widespread in Europe as well as in the US, but that this has not been discovered due to relatively lax supervision.

Greg Archer, of the Transport and Environment (T&E) think-tank, a former government official on engine pollution, told the Standard: “The car industry has repeatedly denied it manipulates emissions tests and uses ‘defeat devices’ to lower emissions on the road. Now VW has been caught red-handed.

“Rather than finding ever more ways to trick tests, the car industry should focus on producing vehicles that are clean on the road.”

T&E research indicates that only one in 10 new diesel cars meets legal emissions limits in real driving conditions, yet all comply with limits in the laboratory.