Volkswagen diesel stop-sale order hits Las Vegas dealers

With three Volkswagen and two Audi dealerships in Las Vegas told to stop the sale order of its four-cylinder diesel vehicles, Volkswagen AG said Tuesday that a scandal over falsified U.S. vehicle emission tests could affect 11 million cars worldwide as investigations of its diesel models multiply.

VW, one of the world's largest automakers, has halted sales of some vehicles in the United States and has pledged to cooperate with regulators.

Las Vegas dealers are awaiting word on a recall of vehicles already sold.

Volkswagen shares plunged Monday and Tuesday after U.S. regulators accused the German automaker of cheating on emissions tests, alleging that nearly 500,000 cars failed federal standards. Volkswagen stock tumbled another 20 percent to a four-year low on Tuesday after some countries in Europe and Asia said they would also investigate. Preference shares were down 19.7 percent, at about $117.97, mid-day. At the lowest point, the declines in the preference and ordinary shares wiped more than $30 billion off the company's market value.

The Environmental Protection Agency alleges the automaker had designed software to let its diesel cars detect when they were being tested for emissions. The software, known as a "defeat device," was installed in some 482,000 cars, spanning model years 2009 through 2015, regulators say.

That has prompted Findlay Volkswagen in Las Vegas and other dealers to halt sales of its Jetta, Golf, Passat and Beetle, said general manager Doug Fleming. The four-cylinder diesels make up about 15 percent of its vehicles, and all imports, he said. Six cylinder diesel-engines are unaffected.

"It's not a high-production vehicle, and we don't sell a ton," Fleming says of the four-cylinder models. "I haven't heard from any customers about it, and we haven't lost a sale yet because of it. It's not a big number and won't cripple us by any means."

In the lab, the cars met environmental standards. On the road, regulators say, they emitted nitrous oxide at up to 40 times federal standards.

"The good news is it's not a safety-related issue," Fleming said. "Anyone driving their car now is fine driving their car."

Fleming said that includes himself — he owns a Golf.

Fleming said that while Volkswagen is considered the world's leading brand in the world the cars aren't as popular in Las Vegas. The dealership sells about 160 vehicles per month, compared with as many as 800 for other brands, though VW sales are up year-over-year, he said.

Findlay also operates Volkswagen dealerships in North Las Vegas, Flagstaff, Ariz., and St. George, Utah.

Volkswagen, which for several years has aired U.S. TV commercials lauding its "clean diesel" cars, was challenged by authorities as far back as 2014 over tests showing emissions exceeding California and federal limits. The U.S. Department of Justice started a criminal inquiry of the effort to game the emissions tests, several sources reported.

The longtime practice could be expensive: The company could be fined $37,500 for each car sold with a defeat device installed — a potential $18 billion.

Volkswagen said it would set aside $7.3 billion in its third-quarter accounts to help cover the costs of the biggest scandal in its 78-year-history, blowing a hole in analysts' profit forecasts.

It also warned the amount could rise, saying Type EA 189 engines used in about 11 million Volkswagen models worldwide had shown a "noticeable deviation" in emission levels between testing and road use.

Volkswagen sold 10.1 million cars in all of 2014.

"We at Volkswagen will do everything that must be done in order to re-establish the trust that so many people have placed in us, and we will do everything necessary in order to reverse the damage this has caused," Martin Winterkorn, VW's chief executive, said in a statement.

Fleming said VW has yet to share many details, and the dealership is waiting further word on how to proceed. It was contacted last week by letter, he said.

Volkswagen also has two Audi dealerships in the valley.

Jim Diguilio, general manager of Audi Henderson, said there's been "no material impact on us to date."

The only vehicle that fits the stop-sale order is the A3, and the dealership hasn't had any of those in stock for the past two months, Diguilio said.

"We haven't had any calls and customers haven't brought it up," Diguilio said. "It's a situation we're monitoring closely. We're very thankful it's not a safety-related item. There have been a lot of recalls and headlines in the automotive industry in recent time has been safety-related and some of it's very significant. This doesn't fall into that category at all."

Meanwhile, New York and other state attorneys general are forming a group to investigate, a spokesman for New York Attorney General Eric Schneiderman said.

The probe would focus on potential environmental and consumer fraud law violations, the spokesman said.

Nevada officials are monitoring the situation.

"We're aware of the issue, but can't comment further at this time," said Monica Moazez, acting communications director of Nevada Attorney General's Office.

Reuters contributed to this report.