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Porsche pulls SUV from N. American market

November 4, 2015

German automaker Porsche, a Volkswagen subsidiary, has said it would discontinue sales of its Cayenne diesel vehicles to US and Canadian markets. It comes as further fronts open in VW's emissions cheating scandal.

Porsche Cayenne Turbo S 2015
Image: Dr. Ing. h.c. F. Porsche AG

Porsche's North American unit said it was discontinuing sales of the 2014-2016 model Cayenne diesel sport utility vehicles until further notice, citing allegations by US regulators that "defeat devices" had been installed in Porsche and Audi models with 3.0 liter and larger diesel engines.

The development is part of a wider scandal that had initially centered on software on up to 11 million diesel vehicles worldwide, which the German auto giant had admitted understated actual emissions of pollutants, including nitrogen oxide.

Volkswagen is investigating whether similar issues are present in relation to emissions of other pollutants or in other types of its vehicles. On Tuesday, the company reported irregularities in the carbon dioxide emissions of about 800,000 cars sold in Europe. Most affected vehicle types were diesel engines, but at least one was a petrol (gasoline) powered car, raising the possibility for the first time that gasoline models may also have questionable emissions.

"VW is leaving us all speechless," said Arndt Ellinghorst of banking advisory firm Evercore ISI. "It seems to us that this is another issue triggered by VW's internal investigation and potentially related to Europe."

VW to meet with authorities

Symbolbild VW Motor
Up to 11 million of VW's diesel vehicles are affected in the scandal.Image: picture-alliance/dpa/J. Stratenschulte

VW said it would immediately start talking to "responsible authorities" about what to do about the latest findings by US regulators.

"From the very start I have pushed hard for the relentless and comprehensive clarification of events," Volkswagen Chief Executive Matthias Müller said in a statement. "We will stop at nothing and nobody. This is a painful process, but it is our only alternative."

Audi, another unit of VW, claimed on Tuesday it had not installed defeat devices in its models and had scheduled meetings with regulators in the US state of California next week to give answers.

Porsche had already cut its earnings outlook as a result of the scandal; it said it was sticking with its current forecast for post-tax profit of up to 1.8 billion euros ($1.97 billion).

Call from industry

"Volkswagen has done a disservice to German industry," Ulrich Grillo, the head of the Federation of German Industries (BDI), told reporters on Tuesday. He called on the firm to clear up the scandal quickly for the sake of the industry as a whole.

VW is under immense pressure to identify those responsible for engineering the cheating and recall affected vehicles to install fixes. It has come under fire from lawmakers, investors and analysts for its sluggish response.

"VW keeps touting utmost transparency, but they really should have put all the cards on the table," said Stefan Bratzel of the Center of Automotive Management think-tank near Cologne. "There is a lot of need for explanation, from Audi too."

Investors have also criticized the appointment of Müller as group CEO, questioning whether a veteran company insider was the right person take the helm as the company weathers the crisis.

jar/jr (Reuters, AP, AFP)