Volkswagen emissions scandal: German carmaker prepares for world's biggest recall

VW has admitted that it used illegal software in its diesel vehicles to cheat US emissions tests

Some analysts have put the cost of the refit operation at more than $6.5bn (AFP/Getty Images)

Volkswagen has scrambled to contain the damage from the diesel emissions scandal by, saying it is already working on technical measures to refit 11 million vehicles that contain the illegal software.

The new chief executive Matthias Müller, who was appointed to replace Martin Winterkorn last Friday, said customers would be informed about the timing of the refit “in the next few days”.

Some analysts have put the cost of the refit operation at more than $6.5bn (£4.3bn). It would be the biggest-ever vehicle recall by a single car manufacturer.

As part of a restructuring, Mr Müller also said the group’s VW division could be given more autonomy, akin to the freedom granted to other group brands such as Porsche and Audi.

Volkswagen has admitted that it used illegal software in its diesel vehicles to cheat US emissions tests. It also stands accused of running the same scam to breach European emissions standards.

Olaf Lies, a board member and economy minister of Lower Saxony, said the people who allowed it to happen had “acted criminally”.

“They must take personal responsibility,” he told BBC2’s Newsnight, adding that the board had only found out about the deception at the last meeting, shortly before the media did.

The German Economy Minister, Sigmar Gabriel, argued that the scandal would not harm the country’s economy. But a new survey suggested that the damage to the company’s share price is far from over. In a poll of 62 institutional investors by Evercore ISI, 62 per cent said it could be impossible to invest in the stock for the next six months. Shares fell €4.10 to €95.20. The scandal hit platinum prices as they slumped to their lowest level since the aftermath of the financial crisis. The metal, a key component in catalytic converters for diesel cars, slid briefly below $900 an ounce for the first time since January 2009 amid concerns over the impact of the scandal on demand for diesel vehicles.

The metal has fallen for seven sessions out of eight, although some analysts believe it has been oversold. HSBC analyst James Steel said: “It strikes us that not enough attention is being given to the likelihood that tighter emissions legislation and increased vigilance by the auto makers will increase platinum demand.”

The price of palladium – used in petrol cars – has gone the other way amid an anticipated surge in buyers.

Volkswagen’s management changes drew criticism from the pension fund adviser Hermes. Director Hans-Christoph Hirt said they had not gone far enough.