VW scandal could affect more than a million UK cars

<p>Nearly one in ten diesel cars on the UK’s roads may need to be recalled.</p>

Up to 1.18 million cars and vans in the UK may need to be recalled, following revelations that they could be fitted with an illegal device that helps them cheat pollution tests.

In the latest in the Volkswagen emissions-rigging scandal, the car manufacturer has admitted that nearly ten per cent of all the diesel vehicles on UK roads may be affected.

Volkswagen says most of the vehicles are passenger cars, including VWs, Audis, Seats, Skodas and vans – these vehicles were all manufactured between 2009 and 2015 and have EA 189 EU5 engines.

The firm notes that all petrol models, along with the V6 TDI and V8 TDI models are unaffected.

Owners of the vehicles will be contacted over the next few days.

"Step by step, affected customers will be contacted with details of a process to get their vehicles corrected in the near future," the company said in a statement. 

"In the meantime, all vehicles are technically safe and roadworthy," the car manufacturer added.

Criticism

The UK government has criticised Volkswagen, calling for a Europe-wide investigation into the scandal. It previously said that it would carry out its own emissions tests if it was found that UK vehicles contained the pollution control software.

Commenting on the affair, transport secretary Patrick McLoughlin said that the government's priority is to protect the people.

"The government expects VW to set out quickly the next steps it will take to correct the problem and support owners of these vehicles already purchased in the UK," he said.

Of the 11 million vehicles believed to be affected by the global scandal, ten per cent were sold to UK customers. Mr McLoughlin said he expected Volkswagen to contact all affected UK customers as soon as possible.

Leigh Day, a law firm that is investigating potential legal claims on behalf of VW owners in Britain, has written to the firm's new CEO Matthias Mueller, demanding that the car manufacturer agree to a compensation settlement. The law firm says consumers paid a premium for what they thought were 'clean' diesel cars.

"If it is found that defeat devices have been used in our clients' vehicles, this undoubtedly amounts to a misrepresentation and a breach of contract," Leigh Day wrote in the letter sent on September 29th.

Shares in Volkswagen dropped to 95.20, their lowest point on Tuesday (September 29th). Today, they recovered by a couple points, but are still significantly below 162.20, the price they were trading at before news of the scandal broke.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.