According to Volkswagen, further "irregularities" have been found in some of its vehicles which could effect miles per gallon and CO2 emission levels.
The news means the German automotive giant could be forced to recall up to 800,000 vehicles across it’s product range including VW, Audi, Skoda and Seat.
Some agencies are reporting that Porsche could also be effected.
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A statement issued by VW says an initial estimate puts the economic risks at approximately €2 billion, and notes that the Board of Management of Volkswagen AG will immediately start a dialogue with the responsible type approval agencies regarding the consequences of these findings.
A spokesperson for the company told the BBC the issue mainly affected diesel vehicles, but could also include petrol models.
The spokesperon said the problem lies in the way certain car types with “smaller engines” were certified to meet carbon dioxide emissions standards.
CEO of Volkswagen Aktiengesellschaft, Matthias Müller commented: “From the very start, I have pushed hard for the relentless and comprehensive clarification of events.
“We will stop at nothing and nobody. This is a painful process, but it is our only alternative. For us, the only thing that counts is the truth. That is the basis for the fundamental realignment that Volkswagen needs.
“The Board of Management of Volkswagen AG deeply regrets this situation and wishes to underscore its determination to systematically continue along the present path of clarification and transparency.”