Battered VW shares drop further as scandal widens

Frankfurt - Shares in Volkswagen dropped as much as 5% on Tuesday after US regulators widened their accusations of emissions test cheating against the German carmaker to include larger diesel engines used in high-end models.

The US Environmental Protection Authority (EPA) said late on Monday VW used devices to rig air-pollution tests in 3.0-litre V6 diesel engines used mostly in Porsche and Audi models.

VW said "no software had been installed...to alter emissions characteristics in a forbidden manner". It did not immediately elaborate and was only prepared to answer questions in writing on Tuesday.

Analysts said the apparent widening of the scandal to VW's most prestigious and profitable brands was deeply worrying, particularly as new CEO Matthias Mueller - picked last month to lead the recovery from the scandal - used to head Porsche.

"Even Chief Executive Matthias Mueller as a former Porsche CEO may need to ask himself whether he bears some responsibility," said Bankhaus Metzler analyst Juergen Pieper, keeping a "hold" rating on VW shares.

At 11:20, shares in Europe's biggest carmaker were down 3.2% at €109.15, leading the decliners in a flat German blue-chip index. The scandal has wiped more than €20bn of VW's market value so far.

"It appears that it is the EPA that has discovered this violation and not VW, raising concerns around reporting, transparency and integrity within VW," wrote analyst Arndt Ellinghorst of Evercore ISI.

VW said on September 22 it had installed software that can cheat emissions tests on about 11 million cars worldwide.

The affair forced Chief Executive Martin Winterkorn to resign, just months after he survived an attempted coup by ex-chairperson Ferdinand Piech.

The EPA said on Monday that about 10 000 vehicles in the United States with larger diesel engines were also fitted with illegal devices.