Volkswagen has confirmed that engine management software on some of its diesel-powered models allowed it to cheat emissions testing, giving affected cars the ability to return a lower result on an official test yet emit a larger volume of pollutants during regular driving.
Uncovered by an investigation by the United States' Environmental Protection Agency, the software - dubbed a "defeat device" by the EPA - loaded a different engine tune when it detected it was being put through an emissions test.
And Volkswagen has now confirmed that the defeat device issue could affect up to eleven million cars worldwide.
Any car equipped with the VW Group's EA189 turbo diesel inline four could be affected, including cars from Volkswagen, Audi, Seat and Skoda. The EA189 was superseded by the EA288 (which isn't affected) in 2012, but continues to be sold in some markets.
Other diesel engines in the VW Group are said to carry the same software package, but without any effect on emissions output. The problem only pertains to the EA189.
In a statement released tonight, Volkswagen said its current family of Euro 6-compliant diesels (to which the EA288 belongs) are not equipped with the emissions-cheating software.
The German auto giant is preparing itself for the inevitable legal fallout of the scandal, and has announced that it will earmark 6.5 billion Euros (AU$10.2 billion) to cover the cost of removing the errant software as well as for "other efforts to win back the trust of our customers".
The cost to the company in fines, damages, and possibly criminal prosecution, in the USA and in other jurisdictions in Europe and elsewhere, may be many multiples more.
According to Volkswagen: "...it remains the top priority of the Board of Management to win back lost trust and to avert damage to our customers".