A Car Scandal Shoves Berlin Off High Ground

24 Sep 2015 | Author: | No comments yet »

Experts: VW emissions scandal pollutes brand.

Shares in Volkswagen jumped yesterday after CEO Martin Winterkorn announced his resignation, days after admitting that the world’s top-selling carmaker had rigged diesel emissions to pass US tests during his tenure. BERLIN— Volkswagen AG VLKAY 6.53 % Chief Executive Martin Winterkorn resigned under pressure Wednesday in the first clear sign that Europe’s largest auto maker is moving aggressively to get past a damaging scandal over cheating on U.S. exhaust-emissions tests.A stunning admission from Volkswagen that it intentionally cheated emissions tests could cost the company billions of dollars and torpedo consumer confidence in the brand, experts said. “In the near term, it’s going to hurt them, there’s no doubt about it,” said Akshay Anand, an analyst with Kelley Blue Book. “Their goal of being the No. 1 automaker by 2018, I don’t know how realistic that will be.” Volkswagen admitted it put software in about 11 million of its diesel cars that switched engines to a cleaner mode during emissions tests and then switched off, allowing cars to run more powerfully while emitting as much as 40 times the legal pollution limit. In a statement, Winterkorn took responsibility for the “irregularities” found in diesel engines but said he was “not aware of any wrongdoing on my part.” “Volkswagen needs a fresh start, also in terms of personnel,” he said. “I am clearing the way for this fresh start with my resignation,” he said.

Environmental Protection Agency that the Wolfsburg, Germany-based company employed software on some VW and Audi NSU 4.99 % diesel-powered cars to manipulate the results of routine emissions tests. Winterkorn for his contributions to the company and said the CEO had “no knowledge of manipulation of the emissions data.” The committee said it would seek prosecution of any Volkswagen employees involved in the affair, and it would establish a special investigative committee to uncover what had happened and who was responsible. Huber said that “Mr Winterkorn had no knowledge of the manipulation of emission values” and praised the departing CEO’s “readiness to take responsibility in this difficult situation for Volkswagen.” Before the scandal broke, Winterkorn, 68, had been expecting to get a two-year contract extension at the board meeting.

His resignation came a day after he issued a video message asking staff and the public “for your trust on our way forward.” The EPA said Volkswagen could face fines of up to €16bn. Weil said the company itself would file a criminal complaint, “because we have the impression that criminally relevant actions may have played a role here”. The prosecutors’ office in Braunschweig, near Volkswagen’s Wolfsburg headquarters, said earlier that they are collecting information and considering opening an investigation against employees of Volkswagen who might be responsible. The company’s culture is famously clubby and success depends on being well-connected in Wolfsburg and striking a balance between boosting profit margins and maintaining strong ties to labor.

Müller gets along well with the Porsche and Piech families who control the company, said people familiar with the matter, and he has deep roots in Volkswagen. He is also well respected in financial circles. “We believe shareholders would welcome such a move,” said Arndt Ellinghorst, automotive analyst at Evercore ISI. The crisis is spreading as regulators and justice officials in Europe and Asia launch investigations, and angry investors and customers file lawsuits seeking damages.

Volkswagen is Germany’s largest corporation, generating revenue of almost €203 billion ($227 billion) last year in a country where every seventh job is linked to the nation’s export-oriented auto industry. A five-person subcommittee of the supervisory board, including Wolfgang Porsche, whose grandfather was Beetle inventor Ferdinand Porsche, gathered in Wolfsburg for a crisis meeting.

Also in attendance were three representatives of the company’s workforce and IG Metall trade union, including Bernd Osterloh, the powerful head of its works council. The company hasn’t offered a rationale, though outside experts speculate it was to ensure strong engine performance and boost fuel economy amid tough U.S. emissions standards. It also asked prosecutors in Braunschweig, the county where VW is located, to investigate. “I’m pleased that Volkswagen is taking such an aggressive stance on admitting the problem and attacking it,” Gina McCarthy, EPA administrator, told The Wall Street Journal on Tuesday.

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