Volkswagen emissions scandal alarms China quality watchdog

In China, the process in Volkswagen AG's diesel cars designed to fool emissions test greatly worries its quality watchdog. It said on Monday that these vehicles need to take specific follow-up measures.

No action was specified by the General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) to take besides demanding that the problem be looked into the soonest possible time. The ministry also said in a separate statement that it will do some investigation into VW vehicles but without giving any additional information, as reported by Wards Auto.

China is considered the world's largest car market. Although few diesel passenger vehicles are marketed in the said country, analysts said the issue may affect the purchasing decisions of Chinese customers.

"I have so far seen little impact on consumers' confidence and trust in the VW brand (in China), but we need to continue to monitor that," said Yale Zhang, head of Shanghai-based consulting firm Automotive Foresight.

According to AQSIQ, about 1,950 imported cars will be recalled by VW in China, specifically imported Tiguan SUVs. These cars have the installed software called 'defeat device' that produce false emission results in the laboratory tests.

Volkswagen had already a lot €6.5 billion ($7.4 billion) in Q3 to cover servicing and marketing outlay associated with the scandal. This could contribute to a great annual loss for VW brand this year.

The car company is one of the world's biggest automaker and has the biggest share of the largest new-car market, in China. No one thought that the Chinese government would have to say something about the scandal despite the small number of VW cars sold in the country, The Motley Fool reported.

Volkswagen's admission of the installed cheating device for emission tests angered the whole world. And of all of the potential costs of this scandal, worry in China could end up hurting VW the most since the country is largely important to VW, crediting for about a third of the automaker's total global sales.

VW sold 2.26 million vehicles in China through August wherein Audi brand has been the market-share leader in China's increasing luxury-car market for several years now. The company earned over €5 billion ($5.7 billion) in China alone last year.

If the Chinese government decided to pressure or condemns VW that would impact VW's ability to get future models approved. It is also possible that VW's other models will be subject to a greater regulatory inspection.