Volkswagen to recall 8.5 million vehicles after Italian police raid offices

Frankfurt: Volkswagen said Thursday it will recall a total of 8.5 million diesel vehicles Europe-wide as police raided the carmaker's office in Italy and those of its sports car unit Lamborghini over a global pollution-cheating scandal.

The massive recall in all 28 of the EU's member states would begin in January 2016 while for countries outside the bloc, the company is still examining which vehicles were affected, VW said in a statement.

The German auto giant was plunged into the biggest crisis in its history after revealing that it had fitted 11 million of its diesel vehicles with software designed to cheat official pollution tests.

The revelations have sparked probes in several countries, and Italian police Thursday raided the company's offices in the country and placed six executives under investigation.

According to the Italian news agency AGI, VW Italy's chief executive Massimo Nordio and Luca De Meo, the marketing and sales chief of the Italian branch of Audi, were among those placed under investigation.

The raids at VW's Italian headquarters in Verona and Lamborghini's base in Bologna came after Italian consumer rights group Codacons filed a fraud suit on behalf of 12,000 Italian owners over the VW-made vehicles.

"Our case is that there has been fraud committed at the expense of consumers. If the police establish there has been illegal activity it will further strengthen our suit," the organisation said in a statement.

Around 117,000 vehicles are affected in Portugal, the country's economy minister said on Thursday -- 102,000 Volkswagens, Audis and Skodas and 15,000 SEATs.

No charge for customers

Struggling to restore confidence, VW said it would be "pro-active in approaching and informing customers" of the recall operation.

Already from the beginning of October, every VW customer had been able to use the company's website to check whether their vehicle was affected, simply by typing in the car's number.

A similar function was also available on the websites of the company's other brands -- Audi, SEAT and Skoda.

"Rectifications of the vehicles will begin from January 2016 and will be free of charge for our customers," VW said.

The solutions could involve both software and hardware measures.

Until the changes could be undertaken, "every vehicle remains technically safe to drive," VW insisted.

Earlier, the German authorities tightened the screws on the embattled carmaker, saying it would monitor the large-scale recall across the country in order to ensure that it is indeed carried out.

Transport Minister Alexander Dobrindt told journalists in Berlin that the Federal Transport Authority KBA had given VW until the end of October to come up with the technical solution for the two-litre diesel engines, where a simple software change would suffice.

For the 1.2-litre and 1.6-litre engines, the carmaker had until the end of November to present its solutions.

The company has set aside 6.5 billion euros in the third quarter, but its new chief executive Matthias Mueller said that would likely only meet repair costs.

In addition to the costs of repairing so many vehicles, the once-respected automaker now faces billions of euros (dollars) in potential fines and legal costs, not to mention the still incalculable fallout in terms of lost sales and customer trust.

'Constructive cooperation'

Earlier, the mass-circulation daily Bild had claimed the German authorities were running out of patience with VW and felt the carmaker's own proposals for a voluntary recall were insufficient.

But Dobrindt later told reporters that VW was cooperating "constructively."

Ties between politicians and the auto industry are traditionally very close in Germany and politicians have been reluctant to attack VW openly since the scandal broke, as it is seen as a flagship of German industry and is a major employer. The regional state of Lower Saxony where VW is headquartered holds a stake in the group.

Mueller said last week that the recall would begin in January and take the rest of the year to complete, angering groups such as environmental campaigners Greenpeace for taking too long.

But Dobrindt confirmed the timetable on Thursday, not least because the technical solutions for the 1.2 and 1.6 litre engines would only be ready for installation in September 2016.

Aside from the millions of vehicles affected in Germany, more than one million could be hit in Britain and nearly a million in France.

According to the weekly magazine Der Spiegel, as many as 30 VW managers could be implicated in the affair but VW dismissed that number, insisting that only a "small group of people" were involved.

But the scandal could also have wider repercussions for the German economy as a whole and its pristine engineering reputation, some experts fear.