VW examining if newer engine involved in emissions scandal

By Andreas Cremer

BERLIN (Reuters) - Volkswagen is looking into whether earlier versions of its current diesel engine contained software capable of rigging emissions tests, it said on Thursday, potentially widening a scandal that has rocked Europe's biggest carmaker.

The German company said last month that software used to cheat U.S. diesel emissions tests could be in up to 11 million vehicles worldwide fitted with its older EA 189 diesel engine.

It said in a brief statement on Thursday it was examining whether the software might also be in earlier versions of its latest EA 288 diesel engine.

That could add millions more to the number of affected vehicles, said Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen.

The more vehicles that include illegal software, the higher the costs Volkswagen could face for refitting them, as well as for potential regulatory fines and lawsuits.

"I think it is a big problem," Dudenhoeffer said, adding the lack of information from Volkswagen made it impossible to know for sure how many more vehicles might be affected.

"It suggests it doesn't know it's product, which is a tragedy."

INVESTIGATIONS

Almost five weeks after it admitted to cheating diesel emissions tests in the United States, Volkswagen is still grappling to get to the bottom of a scandal that has wiped about a third off its stock market value, forced out its long-time CEO and rocked the global car industry and German establishment.

"The way this is all coming out...is amazing," said Bernstein analyst Max Warburton. "Perhaps they can change their advertising slogan from 'Das Auto' to 'Das Motor: Engines so complicat?ed even we don't understand how they work!'" he said.

Volkswagen said in its statement there was no banned software built into vehicles with its latest EA 288 Euro 6 diesel engine, adding this had been confirmed by Germany's KBA automotive regulator.

"Other generations of the EA 288 are currently being examined," it added, without elaborating.

U.S. regulators have already said they are investigating Volkswagen's "generation 3" vehicles in the United States, which contain the EA 288 diesel engine.

But analysts said that would be small number compared with the volume of vehicles with EA 288 engines on European roads.

Diesel vehicles account for about a half of auto sales in Europe, compared with a small fraction in the United States.

Volkswagen said last week it would recall and refit 8.5 million vehicles in the European Union. It added on Wednesday that about 3 million of those would need hardware changes -- a more costly upgrade than the software changes needed for the other affected vehicles.

At 1200 GMT, Volkswagen shares were up 0.9 percent at 101.25 euros.

(Additional reporting by Laurence Frost; Writing by Maria Sheahan and Mark Potter; Editing by Susan Thomas)