In the wake of the scandal, VW’s share price dropped dramatically. Investigators are examining whether executives knew about the magnitude of the unfolding scandal – which began in the US – but failed to inform the markets in a timely manner.
As a rule, executives are expected to keep investors updated as soon as potentially price-sensitive information comes to light.
Porsche SE said the allegations were unfounded, adding it had complied with disclosure rules.
The holding company is based in Stuttgart. It is owned by the Porsche and Piech families – descendants of Ferdinand Porsche, the man who designed the Volkswagen Beetle and founded the sports car business that bears his name.
VW has reported a €3.48 billion operating loss for Q3 of 2015, and a €2.52 billion pre-tax loss triggered by its emissions scandal.
The German automaker has taken a charge of €6.7 billion ($7.4 billion) to cover the costs of the scandal.
In September, Volkswagen admitted installing software designed to cheat emissions tests in 11 million of its diesel cars worldwide.
VW CEO and chairman of the Board of Management, Matthias Müller, said: “The figures show the core strength of the Volkswagen Group on the one hand, while on the other the initial impact of the current situation is becoming clear. We will do everything in our power to win back the trust we have lost.”
The company said it expects profits for the full year to be “down significantly” as a result of the costs of dealing with the emissions scandal, but it said that it is still forecasting a rise of up to 4% in sales revenue.
Meanwhile VW has started retrenching and announced earlier this month it would reduce its research and development budget. In the last three months it has reduced R&D by over €1 billion.
Volkswagen’s new CEO Matthias Muller has said the automaker can shine again in two to three years.
Addressing the company’s top managers on October 15, Matthias Muller said VW needed to become leaner and take decisions more rapidly.
The comments come as VW said it would recall 8.5 million cars in Europe as a result of the diesel emissions scandal.
The move was prompted by Germany’s automotive watchdog, which had earlier told VW to recall 2.4 million vehicles in the country.
German media reports suggest the KBA had rejected VW’s proposals that car owners could voluntarily bring their cars in for repair.
VW gave no details of the recall and said it would contact individual customers directly.
It added that it was working on solutions to fix the recalled cars “at full speed”.
Matthias Muller took over as VW’s chief executive last month when the previous head, Martin Winterkorn, stepped down as a result of the scandal.
He told managers on October 15: “We will significantly streamline structures, processes and (decision-making) bodies. We must become leaner and take decisions more rapidly.”
“Our competitors are only waiting for us to fall behind on technology matters because we are so preoccupied with ourselves. But we won’t let that happen,” Matthias Muller added.
Meanwhile, Italian police have raided VW offices in Verona and Lamborghini offices in Bologna.
Reports suggest Italian prosecutors are investigating alleged commercial fraud.
Last month, authorities in the US discovered some VW diesel cars had been fitted with a device to cheat emissions tests. VW subsequently admitted that up to 11 million cars worldwide could have the device fitted.
Volkswagen has launched a thorough investigation into the scandal, but new chairman Hans Dieter Poetsch has warned that answers would take “some time”.
The company has set aside €6.5 billion ($7.4 billion) to cover the costs of the scandal, but some experts believe the final bill could be much higher.
VW shares recovered slightly last week but are still down almost 20% since the scandal broke in mid-September.
Separately, Winfried Vahland, who was tipped to become VW’s North America boss, has resigned.
VW said Winfried Vahland was leaving because of “differing views on the organization of the new group region”.
Hans Dieter Poetsch has been appointed as VW’s new chairman, following a board meeting to discuss the emissions scandal.
Former VW finance chief said it would be “some time” before the carmaker could uncover the details of the emissions test cheating.
Earlier, the automaker said it expected to start a recall of cars affected by the scandal in January 2016.
All affected cars will be fixed by the end of 2016, VW CEO Matthias Muller told German newspaper Frankfurter Allgemeine Zeitung.
Only a few employees have been involved in the scandal, Matthias Muller added in the interview.
In his first pronouncement as chairman, Hans Dieter Poetsch said the company’s internal inquiry into the scandal would take time.
“Nobody is served by speculation or vague, preliminary progress reports,” he said.
“Therefore it will take some time until we have factual and reliable results and can provide you with comprehensive information,” Hans Dieter Poetsch added, before declining to take any questions.
VW has said emissions test-cheating software is present in 11 million diesel vehicles.
The company said it would also look into its various brands and models, singling out Bugatti, its supercar marque.
Earlier, Mathias Muller told employees at VW’s Wolfsburg home plant in Germany the company is facing changes that “will not be painless”.
All investments that were not deemed absolutely necessary would be abandoned or delayed, he said.
Technical solutions were “within view” and the firm would do everything it could to keep jobs secure, he added.
Future investment in plant, technology and vehicles would be put “under scrutiny”.
“We will do everything to ensure that Volkswagen will stand for good and secure jobs in the future,” he added.
VW has set aside €6.5 billion to cover the cost of the scandal, but analysts say the final bill could be much higher, with potential regulatory fines in the US, class action lawsuits and the cost of fixing the cars.
Former VW CEO Martin Winterkorn is under investigation in Germany, prosecutors say.
Martin Winterkorn will be investigated over “allegations of fraud in the sale of cars with manipulated emissions data,” German authorities said on September 28.
VW said last week that 11 million cars within the group could be affected.
The scandal was revealed after the US Environmental Protection Agency (EPA) found that some diesel cars were fitted with devices that could detect when the engine was being tested and could change the car’s performance to improve results.
Volkswagen apologized for breaching consumers’ trust, and on September 25 announced that Matthias Muller was replacing Martin Winterkorn as chief executive.
Matthias Muller promised a “relentless” investigation to uncover what went wrong.
There were also unconfirmed reports on September 28 that senior R&D heads working across the car group had been suspended. Reuters said the suspensions involved staff from the Audi, Porsche and the VW brands.
Meanwhile, VW shares continue to fall in morning trading, sinking a further 6.6% in addition to last week’s tumble.
The scandal has badly tarnished VW’s name, left it exposed to up to $18 billion in US fines, and wiped a third off its stock market value in a week.
German authorities have demanded that VW set out a timeline by October 7 on how it will ensure its diesel cars meet national emission standards without using cheat technology.
There were widespread German media reports at the weekend that the government ignored warnings two years ago that VW was using the software.
However, on September 28, a government spokesman denied this.