VW faces 'about the worst situation': Ex-GM exec

Former General Motors (GM) vice chairman Bob Lutz said Friday he would not know where to start if he were the next CEO of Volkswagen (VOW3-DE) to address the fallout from the U.S. emission tests cheating scandal.

"This is about the worst situation any automobile company could be in because there really isn't any way to make those 11 million engines run on the legal cycle as well as they ran on the illegal cycle," he told CNBC's " Squawk Box ."

Lutz, also a former president at Chrysler, said it's going to be "incredibly expensive" to bring the affected cars into compliance. Since the performance and the gas mileage will likely to be compromised in the process, the embattled German automaker could face consumer lawsuits, he added.

VW has set aside $7.3 billion in its third-quarter accounts to help cover costs relating to the scandal.

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The Environmental Protection Agency last Friday accused VW of installing a device in diesel vehicles to run maximum anti-pollution controls only when emissions tests were taking place. Fines could add up to $18 billion.

West Virginia University researchers discovered the Volkswagen discrepancies using on-road testing, which EPA officials indicated would be added to the agency's emissions regimen as part of sweeping changes planned in light of the VW cheating.

Volkswagen is scheduled to announce its next chief executive Friday, as the German automaker looks to clean house. Martin Winterkorn resigned as Volkswagen CEO earlier this week, saying he accepts "responsibility for the irregularities," though he denied any personal wrongdoing.

A frontrunner for the top job is Matthias Mueller, president and CEO of VW's Porsche subsidiary.