By William Boston, Friedrich Geiger and Mike Spector 

BERLIN-- Volkswagen AG's emissions crisis deepened on Wednesday, as U.S. environmental authorities and German prosecutors launched new investigations into allegations of cheating, even as the company gave an upbeat presentation of its plan to fix millions of tainted cars in Europe.

German prosecutors in Ingolstadt said they have opened a preliminary probe into allegations that yet-unknown employees at luxury car maker Audi AG installed software allowing some diesel-powered cars to circumvent emissions tests.

The latest investigation adds to a number of government probes taken against Audi's parent Volkswagen AG, the world's largest auto maker, over cheating on emissions testing and understating of emissions and consumption data. The investigation could lead to criminal charges against Audi employees.

Besides its namesake brand, Volkswagen owns the Audi, Porsche and Skoda badges, among others.

The company in September was hit with disclosures that it had rigged engines on some of its diesel models to manipulate emissions tests.

No individuals have so far been charged with wrongdoing in the investigations. However, several Volkswagen executives, including the company's chief executive at the time, Martin Winterkorn, have either stepped down or been suspended pending the outcome of the investigations.

Audi is responsible within the Volkswagen group for development of the three-liter V6 diesel engine that is used by Volkswagen, Audi and Porsche in a number of luxury sedans and sport-utility vehicles.

Following notification earlier this month that these engines didn't comply with U.S. environmental law, the California Air Resources Board, or CARB, on Wednesday launched an official probe of Volkswagen, Audi and Porsche vehicles using the three-liter diesel engine in the model years 2009-2016. It gave VW, Audi and Porsche 45 days to submit a detailed recall plan for the cars.

A spokesman for Audi in the U.S. said the CARB filing and deadline for submitting a recall plan were expected after the official notification earlier this month.

"We fully intend to work on solutions to present to regulators within this window of time. We take this very seriously and treat responses to the agencies as a solemn responsibility," the spokesman said in an email response. He spoke on behalf of Volkswagen, Audi and Porsche, since Audi is responsible for the three-liter engine.

Volkswagen officials didn't immediately respond to a request for comment.

Meanwhile, a spokeswoman for the U.S. Environmental protection Agency said the agency is weighing possible enforcement options against Volkswagen related to the three-liter diesel-engine vehicles and continues to investigate the matter.

In meetings with U.S. environmental authorities last week, Audi confirmed that some three-liter diesel engines that it develops for the Volkswagen group contained auxiliary emission control devices that weren't declared when the vehicles using these engines were certified in the U.S.

Regarding the Ingolstadt investigation, an Audi spokesman on Wednesday said: "we ourselves have the greatest interest in a complete clarification. Therefore we cooperate with the authorities transparently and openly."

News of the new investigations came as Volkswagen provided details about how it plans to fix nearly nine million cars in Europe tainted by the diesel software used to manipulate emissions tests.

The fix will be carried out by a combination of a software update and installation of a small cylindrical part that stabilizes air flowing into the engine, allowing more precise fuel injection and greater reduction of toxic emissions.

The repair will be necessary for 1.2-liter and 1.6-liter diesel engines. The newer 2.0-liter engines only require a software update.

The emissions scandal affects nearly 11 million vehicles world-wide, most of which are in Europe. About 500,000 cars in the U.S. are affected by the software.

The relatively simple fix for the lion's share of the tainted vehicles is welcome news for Volkswagen and suggests that the costs of a global recall set to begin in January could be significantly lower than initially expected.

Ferdinand Dudenhöffer, director of the Center for Automotive Research at the University of Duisburg-Essen, said that the recall of the European cars could cost around EUR500 million ($532 million), considerably less than the EUR6.7 billion that Volkswagen has earmarked to finance repairing the affected cars.

It is still unclear how Volkswagen will fix the affected vehicles in the U.S. The company said the fix approved in Europe isn't applicable to the U.S. vehicles. Volkswagen is in talks with U.S. environmental authorities over how to fix the cars in the U.S.

The investigation of Audi adds another layer of uncertainty, however.

Nicolas Kaczynski, a public prosecutor in Ingolstadt, where Audi's headquarters and main manufacturing plant are located, said his office's investigation was launched after publication of newspaper reports that Audi was responsible developing engines that U.S. environmental authorities allege contain illegal software to evade tough emissions standards.

The rigging of engines in Volkswagen diesel-powered cars to cheat on emissions testing was disclosed by authorities in the U.S. Meanwhile, two separate investigations of Volkswagen are being conducted by prosecutors in Braunschweig, which has jurisdiction over Wolfsburg where Volkswagen's headquarters are located. One of those investigations concerns the rigged diesel engines, while the other centers on the understating of carbon-dioxide emissions.

The company has admitted it understated greenhouse-gas emissions and fuel consumption on around 800,000 cars. That news led to probes of the company in several other countries.

The EPA said on Friday that more cars than previously known contain the suspicious emissions software, namely current and recent Volkswagen, Audi and Porsche diesel models with three liter engines.

Write to William Boston at william.boston@wsj.com, Friedrich Geiger at friedrich.geiger@wsj.com and Mike Spector at mike.spector@wsj.com

 

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(END) Dow Jones Newswires

November 25, 2015 17:48 ET (22:48 GMT)

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