Volkswagen scandal: CEO Martin Winterkorn resigns over emissions deception - as it happened on Wednesday

07:20

That's it for this live blog - thanks for reading. Here's our summary of Wednesday's events.

05:21

Popular Science is not happy about the scandal

04:50

Shares fall in Tokyo

The Japanese stock market has not taken the news about VW well with shares falling 2.34 per cent as trading resumed after a three-day holiday. The benchmark Nikkei 225 index at the Tokyo Stock Exchange fell 422.76 points to 17,647.45 by the break, while the broader Topix index of all first-section shares was down 1.82 percent, or 26.67 points, to 1,435.71.

03:40

Markets up in Hong Kong and Shanghai

This from AFP.

Shares in Hong Kong and Shanghai opened slightly higher Thursday after each suffered losses of more than two percent in the previous session in response to another round of weak Chinese data.

Hong Kong's benchmark Hang Seng Index edged up 0.13 percent, or 28.39 points, to 21,331.3 in the first few minutes.

Shanghai's benchmark Shanghai Composite Index added 0.34 percent, or 10.60 points, to 3,126.49.

The Shenzhen Composite Index, which tracks stocks on China's second exchange, added 0.44 percent, or 7.62 points, to 1,744.06.

03:11

VW faces a big bill in the US

Matt DeLorenzo, a US motoring expert, believes the German car giant will have to dig deep to compensate disenchanted US motorists. "I think it is going to cost Volkswagen a lot of money to fix this problem."

02:25

California set to take a hard line with VW owners

California, a state with particularly stringent environmental laws, could get tough with drivers who don’t comply with the recall.

With the software update likely to impair both the fuel efficiency and performance of the cars, there has been some speculation that VW owners will not bother to bring their cars in.

However the Los Angeles Times is reporting that the state’s Department of Motor Vehicles could intervene and refuse to renew a car’s annual registration until the work has been carried out.

01:20

More trouble for VW as Mexico announces investigation

“Dieselgate” is spreading with the Mexican authorities now also investigating whether the German manufacturer broke the country’s environmental protection laws.

VW is a major employer with a massive plant in Puebla which produces diesel versions of the Jetta, Golf and Beetle.

Only a few months ago the manufacturer also announced it planned to pump $1 billion (£660 million) into the plant which employs 11,000 people directly and a further 35,000 indirectly through its supply chain.

00:40

VW scandal is just beginning, American law professor warns

James Grimmelmann, a law professor at the University of Maryland, predicts that VW is in for a tough time as it tries to correct the environmental wrong.

In theory, he writes, fixing the problem is fairly simple. It just entails updating the emissions-control software, cutting out the code which enables the car to fiddle the emissions test.

It is, he writes, just a matter of taking the car to a dealer and letting technicians plug it into a computer.

But many motorists in the US may not bother to bring their car in. Prof Grimmelmann says there are an estimated 37 million cars in America with unfixed safety recalls.

Of course this fix may not be one welcomed by motorists who will leave the dealer with a slower and thirstier car.

23:58

Martin Winterkorn set for £21 million pension

Martin Winterkorn is likely to receive a generous pension when he steps down from his role as VW’s chief executive.

According to Bloomberg, Mr Winterkorn’s pension pot is worth £21 million and that does not take into account any additional severance payments he might receive.

In theory the severance package is worth two years pay, which in his case would be another £24.36 million. Although this payment could be at risk if the company’s supervisory board holds him responsible for the scandal.

19:59

The rise and fall of diesel

Diesel fuel represents just 2.75pc of new cars in the US, but more than half of car sales in Europe and about a fifth of Volkswagen’s global sales.

“There was a perception, certainly in this country, that diesel vehicles were chugging, dirty work horses that weren’t really suited for families,” said Luke Bosdet, a spokesperson for the AA. “Petrol prices started to go up, and the technology improved, and with pressure to reduce CO2 levels, diesel was the quick fix.”

19:26

British businesses hit by emissions crisis engulfing Volkswagen

The crisis at Volkswagen that has sparked fears hundreds of thousands of British cars could be flouting emissions controls laws has sent shockwaves through the motor dealer industry.

The boss of one of Britain's biggest car chains says the company is fielding enquiries from worried VW buyers, while one independent dealer said the growing scandal could drive some companies out of business.

19:07

VW boss Martin Winterkorn: 'I did nothing wrong'

The chief executive of crisis-hit Volkswagen has quit, after clinging on to power for five days as the scandal over the auto giant’s rigging of pollution control tests engulfed the company.

Martin Winterkorn insisted he had done nothing wrong but that his resignation was "clearing the way for a fresh start”.

18:23

VW faces mounting legal costs

An $18bn penalty from the US Environmental Protection Agency isn't the only thing VW - and whoever its new CEO is - will have to worry about.

It could also face challenges from the Department of Justice, and the FBI. And the list doesn't stop there.

VW is also likely to face a raft of private lawsuits, some of which have just begun to emerge.

A law firm based in Edmonton, Alberta has filed a $1bn consumer class action lawsuit against the Germany car maker.

Richard Mallett, a lawyer at James H. Brown & Associates said: "Volkswagen has admitted wrongfully fixing vehicle emission tests and misleading consumers. Volkswagen customers are very upset and rightfully so."

In total, some 37 lawsuits have already been filed in the US and Canada, according to analysis conducted by Germany's Suddeutsche Zeitung.

The paper reported that the plaintiffs seek compensation for the depreciation of their vehicles and the costs associated with a coming recall.

17:49

Watch: Martin Winterkorn resigns

17:43

Platinum prices take beating on VW scandal

It's not just car maker shares that are suffering.

Platinum prices are also having a rough time of it, sinking to six year lows as demand for the metal is expected to sag.

It is used in the catalytic converters with which diesel cars are equipped.

But the VW scandal is expected to erase confidence in diesel-fuelled vehicles, taking platinum with it, to an extent.

The commodity's value dropped to $926.35 per ounce as a result, its lowest level since January 2009.

17:15

Will VW opt for an internal hire to replace Winterkorn?

VW is due to discuss possible replacements for Martin Winterkorn this Friday.

Analysts have suggested external hires - such as Matthias Mueller of Porsche - as a suitable replacement.

But some are concerned that the speed with which Mr Winterkorn is being replaced might imply that VW will opt for an internal replacement.

Some have touted Herbert Diess - who recently joined VW from BMW - as a possible successor.

There's still the possibility that VW goes for a caretaker and starts on a lengthier search for a CEO candidate.

16:40

Winterkorn's resignation clears way for VW overhaul

The resignation of VW boss Martin Winterkorn clears the way for a re-organisation of the auto giant’s overly complex management structure, according to one analyst.

Arndt Ellinghorst, head of global automotive research at Evercore, has been calling for a shake-up, saying a recent power struggle between Mr Winterkorn and former chairman Ferdinand Piech had “destablised” the business and created inefficiency, with huge amounts of R&D spending that produced little.

"The market has been waiting for this for a long time. This is good news,” said Mr Ellinghorst. “It clears the way for a fresh start.

“It was a matter of hours, not days before he went. VW has been overmanaged and has underperformed.

“Having these and a few other key functions reporting into a new chief executive – ideally Matthias Mueller, who currently runs Porsche – would give the younger guys a chance."

16:33

'No stone left unturned'

Adrian Palmer, managing partner at Proven Legal Technologies, a corporate forensic investigation and e-disclosure expert has questions about the scandal:

"Was this a rogue engineer or an agreed upon company strategy? Communications going back a number of years, from people across the entire company, will be the key source of evidence to identify those responsible.

"Emails, calendar notes, memos and IMs must now be investigated and each thread followed to the end. The regulators will want evidence that no stone has been left unturned in this investigation, so that the correct individuals or organisations see justice.”

16:32

Timeline of the drama

16:28

VW scandal could lead to "one of largest group action lawsuits UK has ever seen"

Jacqueline Young, head of group litigation at Slater and Gordon, said: “If the Volkswagen scandal applies to cars in the UK then this has the potential to be one of the largest group action lawsuits this country has seen. Quite simply it could be the car manufacturer’s Libor scandal.

“If UK cars are found to contain ‘defeat devices’, this would give rise to a claim by car owners and car dealerships who bought VW vehicles on the basis of false information and whose asset has now devalued.

“What is concerning is that the problem might not be limited to Volkswagen, but rather may be endemic across the car industry.

"If the rigging of emission tests affects other car manufacturers then, given that there are 11 million diesel cars on British roads, this could potentially give rise to a legal action the like of which this country has never seen.

“Volkswagen have made a spectacular error of judgment."

16:26

Bloomberg reports that the VW diesel scandal is so big that some analysts are saying it could potentially damage the euro by undermining confidence in the eurozone's powerhouse economy.

16:23

Nordea bans investment in VW

Nordea Asset Management has banned its fund managers from making investments in Volkswagen as the carmaker contends with worldwide investigations into a diesel-emissions scandal, reports the FT.

Nordea, the largest fund house in the Nordic region, with €190bn of assets, said on Wednesday that its fund managers would not be allowed to buy more VW shares or bonds for the next six months.

16:17

Winterkorn had no knowledge of the wrongdoing but "certain illicit action happened"

Volkswagen is creating a special committee to clear up the mess and board confirms Winterkorn had no knowledge of the emissions deception.

Company says all involved in cheat to "face consequences" and that "certain illicit action happened"

Board says: "Overcoming crisis is long-term task" and they "support prosecutor's probe"

Prosecutors in Lower Saxony say criminal charges will be sought

16:12

VW bosses to discuss Winterkorn's replacement on Friday

Volkswagen will see further personnel changes within the next few days, the company said

16:06

Winterkorn "shocked by events"

Here is the now former VW boss Martin Winterkorn's official resignation statement:

I am shocked by the events of the past few days. Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group.

As CEO I accept responsibility for the irregularities that have been found in diesel engines and have therefore requested the Supervisory Board to agree on terminating my function as CEO of the Volkswagen Group. I am doing this in the interests of the company even though I am not aware of any wrong doing on my part.

Volkswagen needs a fresh start – also in terms of personnel. I am clearing the way for this fresh start with my resignation.

I have always been driven by my desire to serve this company, especially our customers and employees. Volkswagen has been, is and will always be my life.

The process of clarification and transparency must continue. This is the only way to win back trust. I am convinced that the Volkswagen Group and its team will overcome this grave crisis

16:04

VW shares rally after Winterkorn announces resignation

Shares in the stricken automotive giant have rallied 7.3pc on news that boss Martin Winterkorn is to step down

16:02

VW CEO Martin Winterkorn resigns in wake of emissions scandal

Mr Winterkorn said he was not aware of any wrongdoing on his part, but that the company needed a fresh start.

He accepted responsibility for the irregularities and is "convinced VW will recover form this grave crisis"

No successor has been announced

15:52

VW holds press conference

Volkswagen has just started a news conference at its headquarters in Wolsburg.

15:24

Volkswagen emissions scandal: all your questions answered

You can find everything you need to know about Volkswagen's 'defeat devices' scandal by clicking on this link

15:17

Credit ratings agency issues warning on VW

Credit ratings agency Fitch has put out a warning on VW after the car-maker admitted cheating on emissions tests.

Fitch, one of the three agencies that dominate credit ratings, has put Volkswagen's rating on "negative watch" in the wake of a scandal that has wiped billions off the value of the company.

Fitch said in a statement that its move reflects "the reputational damage on the group's brands following alleged manipulation of emission tests in the US and the expected multi-billion euros financial impact from potential fines, recall costs, lawsuits and legal claims...this crisis is also another illustration of our assessment of the company's fairly weak corporate governance compared with its peers"

14:53

14:47

Things have gone a bit quiet on the VW front as we await news from the supervisory board's six-member steering committee which is currently grilling CEO Martin Winterkorn over the scandal. So far no information has leaked out.

In the meantime, here's something to keep you entertained:

14:26

German public prosecutor's office in Brunswick launches "preliminary investigation" into VW employees

The public prosecutor's office in Brunswick has announced "a preliminary investigation of unnamed employees at Volkswagen in connection with the allegations of diesel emissions manipulation", according to our man in Berlin.

They say this was prompted by numerous criminal complaints filed by members of the German public against VW over the scandal, but that it would also have automatically happened anyway.

They say they can give out no further information at the moment, until the preliminary investigation has gone over the case.

The way the German justice system works is this: first prosecutors investigate to see whether any crime has been committed. If they decide a crime has been committed, charges brought.

Unlike in the UK, prosecutors in Germany investigate whether a crime has taken place. So this is essentially the equivalent of a police investigation in the UK and there are no specific charges yet.

14:18

Who is investigating VW and where is it happening?

If you're confused at the number of countries/governments/agencies reported to be launching criminal investigations or otherwise into the VW scandal - you're not alone.

That's why we've compiled a handy round-up of all the probes currently in the offing which you can read by clicking on this link

13:55

VW crisis takes the shine off platinum

Volkswagen’s diesel disaster hit the platinum market yesterday, although commodities research analyst Carsten Menke, of Julius Baer, says the reaction was most likely overdone.

Platinum prices fell by more than 3.5pc yesterday, driven by fears that Volkswagen’s diesel saga could weigh on demand from automotive catalysts.

Around 40pc of platinum demand comes from automotive catalysts, which are mainly used for diesel-fuelled cars.

13:47

"No reason to question future of diesel" - German environment spokesman

A German environment ministry spokesman has said there is "no reason to question the future of diesel technology" after Volkswagen admitted that a software programme in some of its diesel engines was intended to trick regulators and consumers about emissions levels in a scandal that has sent shockwaves through the automotive giant and the wider industry.

Some of VW'ss diesel engines were found to be spewing out up to 40 times more dangerous gases than the 'fake' tests had shown

13:33

German public prosecutors looking at "a number of legal suits" already filed against VW by private individuals

As widely feared, the VW scandal has promted a number of individual and class action lawsuits against the motoring giant.

German public prosecutors are launching a preliminary criminal inquiry into VW and AFP cite the following statement from the prosecutors:

"In connection with the allegations of emission gas manipulation in VW diesel engines, the public prosecutors of Brunswick are considering launching a probe against management employees at Volkswagen," explaining that they would first examine all possible information and evaluate a number of legal suits that have already been filed against the company by private individuals"

13:26

VW faces class action lawsuit in Italy over 'flawed' car tests adding hundreds of pounds to fuel costs

Drivers are paying hundreds of pounds a year more than expected for fuel because the ‘flawed’ European car testing regime allows manufacturers to cheat on fuel usage as well as emissions, our energy editor Emily Gosden reports.

As the scandal over Volkswagen’s rigged emissions tests widened, it emerged that the company is facing a class action lawsuit in Italy from a consumer group which found a “huge discrepancy” between advertised and actual fuel consumption on a VW Golf model, leaving drivers an estimated £350 a year out of pocket, Europe’s top consumer organisation has claimed.

13:13

German public prosecutors to launch criminal probe

AFP is reporting that Germany's version of the CPS is to launch a criminal investigation into VW's emissions-fixing scandal.

US authorities are already looking into VW with several states launching criminal probes.

13:02

The gags are coming in thick and fast....

13:00

Now for a bit of lunchtime humour:

Emissions deception culprit seen fleeing VW offices:

12:58

German government defends auto industry

Reuters reports that Germany's economy ministry has said the auto industry is a "pillar" of the Germany economy and that there is no reason to question whether this will remain the case.

12:35

Angela Merkel rejects claims government knew about emissions deception

German Chancellor Angela Merkel’s government has rejected allegations that it knew about Volkswagen's attempts to deceive US regulators and consumers about emissions before the scandal became public.

German transport minister Alexander Dobrindt told reports today that allegations by Germany’s opposition Green party that the government knew about the practices exposed at Volkswagen “are erroneous"

“Like all of us, I found out about it last weekend when I read the newspapers. The German government had no knowledge of this, including anything about defeat mechanisms," he said, adding that the VW case involves “improper tampering with the vehicle that’s explicitly prohibited under European and German rules"

12:30

French energy minister on VW:

"We will be extremely severe"

Reuters reports that French energy minister Segolene Royal has vowed to act harshly on any wayward behaviour exposed by an inquiry into Volkswagen.

Royal, who announced on Tuesday that France had launched a probe to establish whether VW had also used software that deceived US regulators measuring toxic emissions in some of its diesel cars in France, described the matter as one of "particularly irresponsible fraud".

"We will be extremely thorough, extremely severe," she told Reuters reporters as she left a meeting in Paris.

"The victims are workers whose situation has been made more precarious, consumers who were duped and also the state which pays subsidies for purchases of clean vehicles," she said.

She added that she would hold a meeting on Thursday to set the terms of what would be a fully transparent inquiry into VW cars in France.

11:45

German government was in on Volkswagen emissions test rigging - and did nothing to stop it, an opposition party has alleged

The latest shocking news from our man in Berlin about the diesel engine dupe (you can read the whole article by clicking on this link):

The German Green Party claimed Angela Merkel’s government admitted that it knew about VW’s test rigging software in an answer to a parliamentary question in July.

“The government told us in July that it knew about this software, which has been used in the USA, and it’s clear they knew the software was widely in use,” Oliver Krischer, the deputy leader of the Greens told N24 television.

“The government worked with the auto industry, not to see that emissions levels were reduced, but so that the measuring system was set up to allow the cars meet the necessary standards on paper,” Mr Krischer alleged.

Alexander Dobrind, the transport minister, has denied the government failed to monitor the car industry and has already ordered an inquiry into the VW scandal.

11:30

Volkswagen probe in US spreads as part of "multi-state" investigation

The probes of Volkswagen's technology to cheat air pollution tests have widened to include New York and Connecticut among other US states, adding to investigations of the German automaker by federal investigators and a growing list of countries, reports Bloomberg.

Here's the latest:

"The FBI in Detroit is handling a US criminal investigation of Volkswagen, a person familiar with the matter said.

"Environmental Protection Agency investigators in Michigan had already been probing the carmaker for allegedly cheating on US air pollution tests, said the person, who requested anonymity because the matter isn’t public.

"Matt Mittenthal, a spokesman for New York Attorney General Eric Schneiderman, said in an e-mail today that he could confirm New York is part of a multistate group investigating Volkswagen but was unable to say which other states were part of the probe.

"Connecticut is investigating separately, said Jaclyn Falkowski, a spokeswoman for that state’s attorney general, George Jepsen.

"The German government opened its own probe on Tuesday. Environment Canada also started an investigation, promising unspecified “enforcement action” if the carmaker cheated in that country."

11:13

US prosecutors: "no company should be allowed to evade our laws"

PA reports that New York attorney general Eric Schneiderman said he would collaborate with other US states to enforce consumer and environmental law.

The report says:

Mr Schneiderman said: "No company should be allowed to evade our environmental laws or promise consumers a fake bill of goods. We look forward to collaborating with attorneys general across the nation on this matter."

Other states are also looking at filing class actions suits against the world's biggest car-maker and, according to reports the US Department of Justice (DoJ) is looking into the issue, which raises the possibility of the company and individual executives facing criminal charges.

In the past the DoJ has often extracted hefty payments from companies to settle criminal charges.

Meanwhile, the EPA and the California Air Resources Board are investigating the way VW cheated tests with its diesel cars.

11:06

6.5bn euro fund set aside by VW is "nowhere near enough"

As VW counts the cost of the fraud, which is likley to cost the company billions and could lead to class action law suits in the US, Mark Holman of TwentyFour Asset Management says the scandal could bankrupt the firm.

"This is obviously extrapolating to a worst case scenario but just what a bear market thrives upon; any potential floor on prices will probably be reached before all these headlines are out of the way.

"There are likely to be law suits, criminal actions, board level firings, rating agency downgrades, stock price revisions, maybe even selling restrictions on the company, brand damage, increased financing costs, removal from SRI indices etc.

"Our take is that the €6.5bn set aside to cover the costs of the scandal is nowhere near enough, but also that the company, just like BP, will get through this….if only everything in life was as reliable as an emissions test."

10:55

Emissions scandal sends VW bond yields higher

The escalating scandal is accelerating across the global corporate bond markets. Volkswagen's bonds are 10 points cheaper today, with investors in the US demanding yields of as much as 4.6pc to own the German automaker’s dollar-denominated debt yesterday.

"That’s more in line with companies with ratings closest to junk than the A grade that Volkswagen has from Standard & Poor’s," points out Bloomberg.

Investors have drawn parallels to BP, who were held largely responsible for the worst oil spill in US history and asked to pay $18bn in damages, including criminal liabilities for corporate manslaughter.

"VW stock is already down more than that in market cap terms, some $24bn, and VW themselves have set aside €6.5bn in provisions for this action," says Mark Holman, CEO of TwentyFour Asset Management.

"They are definitely cheap enough to consider now but we feel the risks are still just too high. Our opinion is that the news flow has only just begun and there is a lot more to follow on this story, which will weigh heavily on bond prices."

10:14

The Smoking Gun: emissions-rigging scandal uncovered in December last year by BBC's Newsnight programme

The BBC report from December 2014, reveals how car efficiency in the real world - that is, when driven by your average motorist - is normally always 22pc worse than advertised.

The car expert then tells the BBC about a number of tweaks that manufacturers across the industry regularly use to boost test numbers without falling foul of the rules:

-They use ultra slick tyres not suitable for a road

-They pump tyres to a very high pressure often using special gas

-They use very expensive lubricants to make the engine more efficient

-They even get rid of the offside wing mirrors as this is not a legal requirement for a test

-Finally, the expert says: "Cars can detect being tested. They can use that to put the car into a mode in which the engine is ultra efficient or to reduce the sort of pollution coming out of the exhaust pipe during a test..the car knows it is being tested"

09:51

09:31

VW hires BP oil spill lawyers

Volkswagen is reported to have hired the US law firm Kirkland & Ellis to help it deal with the widening scandal.

Bloomberg reports that Kirkland led BP’s defense in the criminal investigation of the 2010 Deepwater Horizon oil disaster that claimed 11 lives and caused the worst offshore spill in US history, according to the firm’s website.

09:21

VW CEO Winterkorn's survival hangs on a few key players

Volkswagen CEO Martin Winterkorn is due to make his case before the executive committee of the automaker's supervisory board today.

Sources have told Bloomberg that "a critical point in the discussion will be what Winterkorn knew about a scheme intended to dupe regulators and consumers about emissions of diesel engines installed in 11 million cars worldwide

"The 68-year-old CEO’s survival hangs on convincing a few key power players, including Wolfgang Porsche, head of the family that controls a majority of VW’s voting shares; Bernd Osterloh, VW’s influential labor leader; and Stephan Weil, prime minister of Lower Saxony, which has special blocking rights at the company. All three are on the committee, which is set to vote on his future."

Bloomberg continues:

"The group first met Tuesday evening to begin discussing how to handle the crisis as the German government demands the automaker take quick action, said sources familiar with the situation. Talks may continue on Friday at a gathering of the full 20-person board, which plays an oversight role and was supposed to sign off on a contract extension for Winterkorn."

Winterkorn has run the Germany-based company since 2007. He is a trained engineer responsible for product strategy, which puts him at the centre of a scandal that has wiped more than 20bn euros off the value of Volkswagen since the start of the week. Shares in the automaker have now declined 41pc since news of the diesel engine cheat scandal broke.

09:04

What should I do if my Volkswagen car is recalled?

Watch this video:

08:08

South Korean environmental officials have finished questioning Volkswagen representatives this morning.

Here's the latest from AFP:

The meeting at the environment ministry focused on the timing and methods for tests to be conducted in South Korea.

"We will complete our work by the end of November," a ministry official told AFP.

Of the five models equipped with test-cheating software in the United States, four have been imported to South Korea - the Golf, Audi A3, Jetta and Beetle - and about 59,000 of them are on the road.

07:51

What happened last night?

After diving 17pc percent on Monday, VW shares closed down a further 19.8pc Tuesday - wiping one-third off its market value - as the automaker's revelations that 11 million cars worldwise could be affected, including a warning that it will have to lower its profit outlook, sent investors fleeing and threatened to topple the chief executive.

Meanwhile, the New York Attorney General announced a criminal investigation into Volkswagen and there are reports from Bloomberg that VW has hired the US law firm Kirkland & Ellis to help it deal with the widening scandal over the carmaker’s faked pollution controls.

Several countries have opened investigations into VW as well, including South Korea, Australia, Canada, France, Italy and even Germany.

Many other car manufacturers have hit out at VW, criticising the group for its wrongdoing.

At a late night board meeting on Tuesday, CEO Martin Winterkorn issued another apology, but he didn't step down.

Tonight, Mr Winterkorn is due to make is case before the executive committee of the automaker’s supervisory board.

07:45

Good morning and welcome to our continuing coverage of the emissions cheating scandal that has rocked German automotive giant Volkswagen to its core.

European stock markets are set to open lower today following weak manufacturing data from China and the ripple effect from the VW scandal.

"Of all the factors that we saw yesterday the one that is most likely to be a particular worry is the spill over effects this drama surrounding Volkswagen will have on the wider German economy in the weeks and months ahead at a time when there appears to be some evidence that growth may well be slowing in the euro area," says Michael Hewson, chief market analyst at CMC Markets UK.

Roughly one in six German jobs depends in some way on the car industry, as well as 17.9pc of German exports, and this week’s events have tarnished the German car industry's previously spotless reputation.

Germany is also the powerhouse of the ailing eurozone economy which can ill afford a setback to growth.

"It is going to take quite a lot of skilled panel work to repair the dents in the 'Made in Germany' brand, particularly given this scandal has exposed a deliberate attempt to deceive. What can they have been thinking?" says Mr Hewson.

Accordingly, this disaster could have implications for German GDP growth in the months ahead.