South Korea to probe VW, Audi diesel car emissions

SEOUL (Reuters) - South Korea said on Tuesday it would investigate emissions of three VW and Audi diesel cars after maker Volkswagen AG admitted rigging emissions tests on diesel-powered vehicles in the United States.

If problems are found, South Korea’s environment ministry said its probe could be expanded to all German diesel imports, which have surged in popularity in recent years in a market long dominated by local producers led by Hyundai Motor.

The probe will involve 4,000 to 5,000 vehicles, covering VW Jetta and Golf models and sister company Audi’s A3 produced in 2014 and 2015, Park Pan-kyu, a deputy director at South Korea’s environment ministry, told Reuters.

The ministry will consider recalling those vehicles after conducting the investigation, he said.

“If South Korean authorities find problems in the VW diesel cars, the probe could be expanded to all German diesel cars,” he said.

Volkswagen Korea declined to comment.

The U.S. Environmental Protection Agency said last week that Volkswagen, the world’s biggest carmaker by sales, used software that deceived regulators measuring toxic emissions and could face penalties of up to $18 billion. The U.S. Department of Justice has started a criminal probe, according to media reports.

Suh Sung-moon, analyst at Korea Investment & Securities, said the scandal would hurt South Korean demand for Volkswagen and Audi cars and benefit local brands such as Hyundai and sister firm Kia Motors.

“South Korean consumers are very sensitive to news, and this emission news will have an impact on the import market,” he said.

German car sales in South Korea have soared since a 2011 free-trade deal eliminated duties on vehicles imported from Europe.

Vehicle imports from Germany rose 18.2 percent to $4.5 billion in the first eight months of 2015, South Korean customs data show, following a 42.5 percent increase to $5.8 billion for all of 2014.

Diesel models accounted for 68 percent of all cars imported into the country in the first half of the year.

Volkswagen and Audi accounted for 28.2 percent of all foreign cars sold the in the first eight months of this year in South Korea, according to the Korea Automobile Importers and Distributors Association.

Reporting By Sohee Kim; Writing by Se Young Lee; Editing by Tony Munroe and Will Waterman