US Volkswagen chief admits knew of emissions problem in 2014

The US head of Volkswagen prepared to apologize to Congress Thursday over the "deeply troubling" pollution scandal as it emerged he knew of a potential problem with vehicle emissions as early as spring 2014.

In testimony released ahead of his hearing with the House energy committee, Michael Horn offered a "sincere apology" for Volkswagen's use of a software program "that served to defeat the regular emissions testing regime."

He also admitted he was made aware of "a possible emissions non-compliance" in early 2014 after researchers at the University of West Virginia found that the cars affected released up to 40 times as much nitrogen oxide than was legally permissible.

Horn said he was also told by his staff at that time that US authorities could conduct tests for so-called "defeat devices", which release lower levels of emissions under testing.

The US boss said that later that year he was informed technical teams had a plan to bring the vehicles into compliance, and that they were working with the authorities on the process.

He said Volkswagen finally admitted to US regulators in September that hidden software installed in certain diesel vehicles "could recognize whether a vehicle was being operated in a test laboratory or on the road," emitting higher levels of pollution outside the lab.

The company had "broken the trust of our customers, dealerships, and employees, as well as the public and regulators," he said according to the prepared testimony, promising those responsible would be held accountable.

- Investigations launched -

At home in Germany, Volkswagen on Wednesday submitted to authorities its plans on fixing the affected vehicles, saying it would take until the end of next year for the issue to be resolved.

"If all goes as expected, we can start the repairs in January. By end 2016, all the cars should be in order," VW chief Matthias Mueller told the Frankfurter Allgemeine Zeitung daily.

The world's biggest carmaker by sales has launched investigations into who was behind the scam, which involved more than 11 million diesel cars.

Mueller said that "four people, including three responsible directors on different levels of the development of Volkswagen engines," had been suspended over the deception, adding that "others were already on partial retirement".

The former Porsche chief, who took over the driver's seat at VW at the height of the crisis, said he did not believe top management could have been aware of the scandal, which threatens to cost the company billions in vehicle overhauls and fines.

The development of an engine is "a complex process that involves interaction between programmers, engine and gear box developers and those who deal with measurements for official tests," Mueller said, adding that these are tasks in which "a director is not directly involved".

- 'Incalculable' fines, lawsuits -

The shock revelations have wiped more than 40 percent off Volkswagen's market capitalization, but the direct and indirect costs are still incalculable as the company risks fines in several countries and possible damages from customers' lawsuits.

The powerful US Senate Finance Committee said Wednesday it is probing whether the company used the defeat devices to unfairly gain tax credits on diesel cars sold in the United States.

Altogether, buyers of VW cars and the company itself may have benefitted from more than $50 million (44 million euros) in these subsidies under the 2005 Alternative Motor Vehicle Tax Credit, in its 2009 and 2010 models, the committee said.

Volkswagen meanwhile issued a public apology in South Korea over the scam, and said it would consider a voluntary recall of 120,000 cars in the country.

VW Korea President Thomas Kuehl was due to answer politicians' questions in parliament Thursday afternoon, according to state broadcaster KBS.

Volkswagen has said that the 6.5 billion euros ($7.3 billion) it set aside in the third quarter over the affair was only the estimated sum to cover repairs of affected vehicles.

To meet the billions of euros in financial outlays, Mueller said the group would embark on a huge cost-cutting program and review several projects.

Germany's football world would not be spared, as Volkswagen owns the VfL Wolfsburg club and has investments in 17 professional clubs.

In the United States alone it faces up to $18 billion in fines from the Environmental Protection Agency, plus potential payouts from class action lawsuits and penalties from other regulators.

Asked about the looming fines, Mueller noted however: "Think about this: no one died from this, our cars were and are safe."