Volkswagen CEO Matthias Mueller To Update German Chancellor Angela Merkel On Emissions Probe On China Trip: Source

BERLIN -- Volkswagen's new head, Matthias Mueller, will update German Chancellor Angela Merkel on the automaker's internal investigation into an emissions-rigging scandal during a trip to China, a person close to the matter told Reuters. Five weeks after it admitted to rigging U.S. diesel-emissions tests, Volkswagen is struggling to get to the bottom of a scandal that has wiped more than one-quarter off its stock-market value, forced out its longtime CEO and rocked both the global car industry and the German establishment.

The auto industry accounts for one in seven jobs in Europe's biggest economy, and politicians including Merkel have rallied around the sector. The chancellor has also called on Volkswagen to clear up the matter quickly and openly.

A Volkswagen representative confirmed Sunday that CEO Mueller would accompany Merkel on her trip to China, which is due to begin Wednesday, the same day the carmaker publishes its third-quarter financial results. He said Volkswagen would bring forward a conference call on earnings to 12:30 p.m. local time (7:30 a.m. EDT) from 2 p.m. to allow Mueller to board Merkel's plane later in the afternoon. He declined to provide details of Mueller's agenda for the trip.

The source close to the matter said Mueller was also to meet with the heads of VW's two Chinese joint ventures during the trip to discuss strategy.

Last year, VW sold more than one-third of its record 10.1 million vehicles in China, where it has joint ventures with Faw Car Co. Ltd. and SAIC Motor. The group warned in July that profits from the joint ventures could drop below 2014 levels this year amid a shift to lower-priced cars, as demand in China is increasingly driven by rural, less wealthy regions.

Analysts expect Volkswagen to report Wednesday that it slumped to a third-quarter operating loss of almost 3.5 billion euros after setting aside 6.5 billion in provisions to cover costs related to the emissions scandal. The expected loss compares with a profit of 3.2 billion euros in the same quarter last year.

German monthly Manager Magazin reported Saturday that Volkswagen expected the costs of the scandal to swell to a total of more than 30 billion euros.

Volkswagen said Thursday it was looking into whether more vehicles contain software capable of cheating diesel-emissions tests, potentially increasing the cost and disruption of a scandal that has rocked Europe's biggest carmaker.

(Reporting by Andreas Cremer; Writing by Maria Sheahan; Editing by Clelia Oziel)