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VW launches investigation into diesel emissions scandal

In the US, Volkswagen halted the sale of all 2015 and 2016 models containing the four-cylinder 2.0 litre TDI engine.

Volkswagen's crisis over allegedly cheating on US emissions tests has deepened, with the German carmaker halting American sales of popular diesel-powered cars and issuing a sweeping apology for violating customers' trust. It also launched an external investigation.

The company could face billions of dollars in fines and the crisis could further weaken Volkswagen chief executive Martin Winterkorn's position. He narrowly survived efforts by a major shareholder to oust him earlier this year and was passed over for the chairman's job, the company's top post, this month.

"I personally am deeply sorry that we have broken the trust of our customers and the public," Mr Winterkorn said, adding that VW was co-operating with authorities and had commissioned an external probe.

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The US is crucial in Volkswagen's efforts to become the world's leading carmaker by sales. The German company has built its campaign to grow in the US market on a promise that its clean-diesel engines deliver better performance and low emissions. It is neck-and-neck with reigning sales leader Toyota and overtook the Japanese carmaker during the first half of this year. But the emissions test probes could stall its progress.

Even before the emissions issue, the automaker's namesake Volkswagen brand has been battling declining sales in the US market. And Audi, its luxury carmaker, is finding it hard to catch up in the US with rivals BMW and Daimler, which makes Mercedes-Benz vehicles.

The EPA probe could force Volkswagen and its Audi unit to recall thousands of vehicles that contain the company's "clean diesel" engines

On Friday, the US Environmental Protection Agency and the California Air Resources Board alleged that Volkswagen used software, dubbed a "defeat device", in the cars to make diesel-powered engines appear to have lower levels of emissions than they actually did. About 482,000 Volkswagen diesel-powered cars were affected.

The EPA probe could force Volkswagen and its Audi unit to recall thousands of vehicles that contain the company's "clean diesel" engines. The four-cylinder 2.0-litre turbo direct injection, or TDI, engine is commonly found in Volkswagen's Passat, Jetta, Golf, Beetle and in Audi's A3 luxury compact model.

A Volkswagen spokesman said the carmaker halted the sale of all 2015 and 2016 models containing the four-cylinder 2.0 litre TDI engine. The EPA investigation affects cars sold since 2008. The company hadn't recalled cars, the spokesman said.

Realisation that Volkswagen may have cheated to get better emissions results could undermine its US recovery and further weaken its shares, which are down 37 per cent since March 16.

Additional reporting: Amy Harder, Mike Spector and Christina Rogers