Audi Halts Diesel A6 Deliveries Over Latest Emissions Revelation

(Bloomberg) -- Volkswagen AG’s Audi unit suspended deliveries of some of its popular sedans and coupes after informing German authorities of irregularities in emissions systems, embroiling the luxury brand further in the carmaker’s diesel scandal.

An internal review revealed abnormalities in the engine-management software of current A6 and A7 models with V-6 diesel motors, Audi said in a statement on Tuesday. That prompted a halt in deliveries pending an inquiry by regulators in Germany as well as Luxembourg, where the models were certified.

The problem relates to diesel engines with the latest Euro-6 standard, rather than older versions generally affected in the past. The issue raises questions about Audi’s handling of emissions irregularities and will likely increase pressure on Rupert Stadler, the brand’s chief who has been a frequent target of criticism in the aftermath of the scandal. The carmaker, which is 99.6 percent-owned by Volkswagen, holds its annual shareholders meeting on Wednesday.

The inquiry affects about 60,000 vehicles worldwide, including 33,000 in Germany, according to Germany’s Transport Ministry. Audi said no U.S. customers are affected. The A6 sedan starts at 58,050 euros ($68,900) in Germany, while the A7 costs from 66,300 euros.

Volkswagen shares dropped as much as 3.04 euros, or 1.7 percent, to 176.40 euros and were down 1.4 percent at 3:25 p.m. in Frankfurt trading. Audi is the biggest contributor to the German auto giant’s profit.

Urea Injections

As Germany’s automotive watchdog continues to scrutinize Volkswagen’s diesel portfolio, Audi said in February that it is recalling top-of-the line Audi A8 sedans with 4.2-liter V8 diesel motors. The carmaker said in March that additional recalls are likely as it undertakes more tests on combinations of engines and transmissions.

VW Chief Executive Officer Herbert Diess has pledged to intensify compliance as the world’s largest automaker wrestles with the fallout from the diesel-emissions scandal that was uncovered by U.S. authorities in September 2015. VW has largely restored profit, and vehicle deliveries are at a record high, but thousands of lawsuits from disgruntled customers and investors are set to drag on for years. VW has earmarked more than 25 billion euros so far for fines, recalls and other related expenses.

The A6 contains software that artificially reduces the injection of urea -- used to neutralize smog-causing emissions -- to extend the range of the refill tank, according to Der Spiegel magazine, which first reported about the issue. Audi, which didn’t elaborate on the nature of the irregularities, said it would provide a software update in coordination with authorities.

--With assistance from Karin Matussek

To contact the reporters on this story: Christoph Rauwald in Frankfurt at crauwald@bloomberg.net, Birgit Jennen in Berlin at bjennen1@bloomberg.net.

To contact the editors responsible for this story: Anthony Palazzo at apalazzo@bloomberg.net, Chris Reiter, Iain Rogers

©2018 Bloomberg L.P.