BANGKOK -- Following revelations that Volkswagen cheated on emissions tests in the U.S., regulators around the world are pushing for stricter testing methods. Better testing will inevitably alter the rules of the game for automakers in rich countries, giving cleaner cars like electric and hybrid electric vehicles a greater advantage. At the same time, it may well widen the air-quality gap between developed and developing countries.

     The VW scandal came to light on Sept. 18 when the U.S. Environmental Protection Agency announced the German car maker had installed a piece of software on some of its diesel-powered cars to cheat on official emissions tests. The "defeat device," as the software is called, allegedly turns off emissions controls when driving normally for better fuel economy and turns them on to suppress pollutant emissions when it detects the car is undergoing an emissions test. The EPA said VW had admitted to the use of the software and the company may face up to $18 billion in civil penalties, not including other possible fines and compensation orders.

     The scandal involves 482,000 cars sold in the U.S., and the EPA has ordered VW to recall all of them. The affected cars include the 2009-2015 model years of the VW Jetta, VW Beetle, VW Golf and the Audi A3, and the 2014 and 2015 VW Passat. The company later announced that an estimated 11 million of its cars worldwide were equipped with the same type of engine and software, and that it had set aside 6.5 billion euros ($7.3 billion) in the July-September quarter to cover costs expected to be incurred by the scandal.

     The scandal inevitably shook VW's management. On Sept. 25, the company's supervisory board replaced Martin Winterkorn with Matthias Mueller, who has been chairman of VW's Porsche unit, as its chief executive. In the following week, it was revealed that the German prosecutors had started a criminal investigation against Winterkorn. The investigation focuses on "allegations of fraud in the sale of cars with manipulated emissions data," the German prosecutor's office said on the 28th.

Ripple effects

Repercussions from the scandal have spread across continents and sectors

     Investors dumped shares of VW's major suppliers. Stock prices of such part suppliers as Aisin Seiki, Ibiden of Japan and Motherson Sumi System of India declined more than 5%.

     Suzuki Motor of Japan saw the value of the 4.39 million VW shares it holds plummet to 70 billion yen ($580 million) from 137 billion yen. Suzuki announced on Sept. 26 that it will promptly sell all of its VW shares in a private deal to the German carmaker's largest shareholder. The capital gain from the sale will be far less than it would have been if the decision had been made before the scandal.

     In Thailand, VW was poised to invest 31.4 billion baht ($882 million) in a new plant, which was expected to start operation in 2019 and create many jobs. The plan may now have to be revised, company sources said. A government official expressed concerns that the plan could be canceled or scaled back.

     In the commodities market, the price of platinum, used in emissions-controlling catalytic converters for diesel vehicles, has slumped to its lowest since January 2009 on fears of a drop in demand. In contrast, the price of palladium, used in catalytic converters for gasoline vehicles, rose considerably. Diesel fuel refiners are already reconsidering the capacity expansion plans they had made on the assumption of a continued rise in demand.