Volkswagen's US boss: We totally screwed up

VW US CEO: We totally screwed up
VW US CEO: We totally screwed up

Michael Horn, chief executive of the Volkswagen Group of America, used the launch of the 2016 Passat to issue an abject apology, after the German automaker was caught cheating on U.S. emissions tests.

"Our company was dishonest, with the EPA and the California Air Resources board, and with all of you and in my German words, we have totally screwed up," Horn told the audience at the lavish launch event in Brooklyn, New York.

"We have to make things right, with the government, the public, our customers, our employees and also very important, our dealers," Horn added, saying that the company's actions were not consistent with its core values.

"Along with our German headquarters we are committed to do what must be done, and to begin to restore your trust," he told the audience at the Passat launch, which featured a performance by rocker Lenny Kravitz, as well as German beer, pretzels and fondue.

Horn's presentation on the new Passat did not promote the environmental efficiency of the car's "clean diesel" model.

A Volkswagen Passat is offered for sale at a dealership on Sept. 18, 2015, in Chicago. The Environmental Protection Agency has accused Volkswagen of installing software on nearly 500,000 diesel cars in the U.S. to evade federal emission regulations.
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The U.S. Environmental Protection Agency (EPA) alleged on Friday that the automaker had used software to trick regulators measuring toxic emissions on its diesel vehicles between 2008 and 2015. The software allowed the cars to emit pollutants above legal limits pollutants while on the road, but reduced the pollution during emissions tests.

Volkswagen said on Sunday that it had launched an investigation. In a statement, chief executive Martin Winterkorn said: "I personally am deeply sorry that we have broken the trust of our customers."

A video posted to the Volkswagen's website on Tuesday showed Winterkorn apologizing again and pledging to work on uncovering the full extent of the company's actions.

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"I am endlessly sorry that we betrayed the trust" of millions of people, Winterkorn said, adding that "swift and comprehensive clarification has now utmost priority."

"To make it very clear: Manipulation at VW must never happen again," he added.

Volkswagen shares plunged 18 percent on Monday and nearly 20 percent on Tuesday on the back of the admission, as German government officials expressed concern that the scandal could damage the reputation of its car industry.

On Tuesday, Olaf Lies, a German politician who also sits on Volkswagen's supervisory board, told radio station Deutschlandfunk that he expected heads to roll at the company once it is clear who was responsible for falsifying the U.S. tests.

"I am sure that there will be personnel consequences in the end, there is no question about it," Lies said.

Read MoreVolkswagen stock drops 20% on US diesel recall probe

The U.S. Department of Justice, meanwhile, has reportedly begun a criminal probe into Volkswagen's actions. And lawmakers on the House of Representatives' Oversight and Investigations Subcommittee said they would hold a hearing on the issue in the coming weeks.

The cheating could see Volkswagen face U.S. penalties of up to $18 billion.

On Tuesday South Korea's environment ministry said it planned to conduct an investigation into emissions from Volkswagen and Audi diesel cars, in response to the U.S. revelations.

In Australia, a spokesman for the Department of Infrastructure and Regional Development said: "The department is seeking urgent clarification from Volkswagen Group Australia, as to whether vehicles supplied to the Australian market use similar software to that used in the U.S."

An official from Taiwan's Environmental Protection Administration told CNBC it was concerned about the scandal and would ask Volkswagen's local plant for a report on its cars. The official added that the ministry would closely monitor the German government's decision on how to deal with Volkswagen.

—Reuters contributed to this report.

Correction: Michael Horn was speaking at the launch of the 2016 Passat. An earlier version misstated the year.