VW Scandal Threatens to Ensnare BMW as EU Urges Wider Probe

Volkswagen AG's diesel-cheating affair deepened as the European Union urged all 28-member countries to start their own investigations and the scandal threatened to ensnare rival BMW AG.

"We are inviting all member states to carry out investigations at the national level," European Commission spokeswoman Lucia Caudet said in Brussels on Thursday. "We need to have the full picture whether and how many vehicles certified in the EU were equipped with defeat devices."

In Germany, the transport ministry said Thursday spot checks of vehicles would not be limited to Volkswagen, while BMW shares plunged after a report that a diesel version of the X3 sport utility vehicle emitted more than 11 times the European limit for air pollution in a road test.

The entire auto industry and the methods used for testing vehicles are coming under scrutiny following revelations that VW's "clean diesel" cars have software intended to defeat emissions tests. The European automakers' lobby group, the ACEA, on Wednesday placed the blame in VW's court, issuing a statement saying that "there is no evidence this is an industry-wide issue."

Following VW Chief Executive Officer Martin Winterkorn's departure, other executives will likely lose their jobs. German newspaper Bild reported Thursday that Audi development chief Ulrich Hackenberg and Porsche development head Wolfgang Hatz will leave their posts. Hackenberg was previously responsible for VW brand development and Hatz ran the nameplate's motor development. VW declined to comment. The automaker has also asked local prosecutors to open a criminal probe.

German Probe

Germany's motor vehicle administration "will concentrate its investigations not only on the Volkswagen models in question but will also do spot checks of other car manufacturers," Transport Minister Alexander Dobrindt told reporters in Berlin.

Emissions measured in road tests of 15 new diesel cars were an average of about seven times higher than European limits, according to a study published last October by the International Council on Clean Transportation, the same group whose tipoff led U.S. regulators to investigate a gap between VW diesels' emissions in tests and on the road.

ICCT also found a gap between real-world and lab performance in BMW's X3, Germany's Autobild magazine reported. BMW said that there's no system in its cars that responds to tests differently than it would operate on the road.

"The BMW Group does not manipulate or rig any emissions tests," the Munich-based company said in a statement in response to the report. "We observe the legal requirements in each country."

Shares Drop

BMW shares traded down 6.8 percent to 74.34 euros at 2:09 p.m. in Frankfurt. German car maker Daimler AG dropped as much as 5.8 percent. VW, which has lost more than 20 billion euros in market value this week, was 1 percent higher.

"There's no suggestion BMW has done anything illegal," said Juergen Pieper, an Frankfurt-based analyst with Bankhaus Metzler. "However, there are concerns for the long-term damage on the business with diesel cars for every manufacturer that builds cars with these engines."

VW's supervisory board will discuss the Winterkorn's replacement on Friday following the CEO's abrupt resignation Wednesday. Possible successors include Porsche unit chief Matthias Mueller, who is backed by members of the family that controls a majority stake in Volkswagen, and Herbert Diess, a former BMW AG executive who took over the newly created post of VW brand chief this year, a person familiar with the matter said.