The bad news for Volkswagen AG (VAG) just keeps coming. Yesterday there were claims that VW parts supplier Bosch warned the company in 2007 not to sell cars to customers that still had the emissions-defeating software installed, and today Reuters reports that German prosecutors are investigating the company on possible fraud charges. Last week, the US Department of Justice announced that it is also investigating possible fraud at VW.

Although US diesel emissions regulations are much stricter than those in the EU—the latter mainly focused on CO2 targets—Alexander Dobrindt, the German transport minister, has accused the company of falsifying its EU tests as well.

At issue are VAG's 1.8L and 2L four-cylinder diesel engines. VAG claimed to be able to meet US emissions rules without the use of expensive urea injection, something rivals like Mercedes had to employ in order to comply. VAG uses common engines across its different brands, and now Audi has also said that 2.1 million (of the total 11 million) diesel-engined cars sold with the so-called "defeat device" were from its showrooms. It's reasonable to expect that the scandal will affect other VAG brands Skoda and Seat, and we are still watching to see if the larger V6 diesel engines used by VAG also fall foul of the law.