Volkswagen says can bounce back as recalls 8.5 million EU cars

Volkswagen can bounce back from the scandal over its rigging of diesel emissions tests in two to three years, its new CEO predicted on Thursday, as the carmaker outlined plans to recall 8.5 million affected vehicles in the European Union. Matthias Mueller, who took the helm last month after Europe's biggest automaker admitted to cheating US diesel emissions tests, said the German company needed to give more power to its brands and regional operations while working to get to the bottom of the biggest business scandal in its history.
"We have a good chance of shining again in two to three years," he said in a speech to Volkswagen managers in Leipzig. Volkswagen has said up to 11 million vehicles world-wide could contain banned software that allows them to know when they are being tested and temporarily reduce toxic emissions.
The German company said on Thursday it would recall around 8.5 million vehicles affected in the European Union following an order from Germany's KBA automotive watchdog, which is taking the lead for other national EU regulators. The KBA said the recall, involving 2.4 million vehicles in Germany, should start at the beginning of next year and would be mandatory, meaning drivers do not get to chose whether or not to bring in their cars and vans for servicing.
A recall of all 11 million vehicles would be among the biggest in history by a single automaker, similar in scale to Toyota's 2009-2010 recall of more than 10 million vehicles over acceleration problems, though dwarfed by the number recalled by multiple carmakers due to faulty Takata air bags. Some analysts have said the scandal could cost Volkswagen as much as 35 billion euros ($40 billion) to cover vehicle refits, regulatory fines and lawsuits.
Prosecutors in Italy said on Thursday they were investigating local managers at Volkswagen and its Lamborghini sports car business for alleged fraud. Nearly four weeks after it publicly admitted to rigging US emissions tests, Volkswagen is under pressure to identify those responsible. It has been criticised by politicians, investors and consumers for the time it is taking to produce answers. Two people familiar with the matter said on Thursday the company had suspended Falko Rudolph, who oversaw the development of diesel engines between 2006 and 2010, as part of its investigation into the wrongdoing, which has already seen three top engineers suspended.