Volkswagen scandal causes anger, uncertainty for owners, car dealers

24 Sep 2015 | Author: | No comments yet »

This how big a pension the Volkswagen CEO could get after stepping down.

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. Volkswagen chief executive Martin Winterkorn, 68, has resigned, taking responsibility for the diesel emissions testing scandal that has severely damaged the world’s largest car maker. In a brief statement, he said he would “accept responsibility” for the “irregularities that have been found in diesel engines” and tendered his resignation to the supervisory board. “I am shocked by the events of the past few days. Martin Winterkorn said the German company needed a fresh start but stressed he was “not aware of any wrongdoing on my part” as he stepped down as boss. The smog-test trickery has wiped out billions of euros in VW’s market value and raised the spectre of criminal investigations and billions more in fines.

The resignation of Winterkorn follows five days of growing pressure on VW after the US Environmental Protection Agency (EPA) accused the carmaker of using a defeat device to cheat emissions tests on diesel cars. The executive committee included Porsche-Piech family representative Wolfgang Porsche (51% voting shareholder), the premier of Lower Saxony state (20% shareholder) and three union chiefs. Boz Michalowska, a partner at Leigh Day, said: “This could well lead to one of the largest group claims ever in this country against Volkswagen for the way in which consumers may have been misled in relation to their vehicle.” Almost 50 class action lawsuits have already been filed in the US and Canada by law firms including Clifford Law and Hagens Berman. Winterkorn, Volkswagen’s boss since 2007, had come under intense pressure since the disclosure that stealth software makes VW’s 2009-2015 model cars powered by 2.0-litre diesel engines run cleaner during emissions tests than in actual driving. VW has enlisted Kirkland & Ellis, the US law firm that defended BP after the Deepwater Horizon oil disaster, to help it deal with the growing pile of investigations and lawsuits.

Prosecutors in the Lower Saxony city of Braunschweig are considering opening an investigation that would target “responsible employees” after several private individuals filed complaints with prosecutors. Germany’s vice chancellor and economy minister Sigmar Gabriel said the scandal must be quickly cleared up through cooperation by Germany and the company with US prosecutors and authorities. “We must not allow the impression to arise that this is a problem for the whole auto industry or that it raises questions over the integrity of Volkswagen overall.

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. Almost €25bn, or a third, has been wiped off the value of VW this week, although shares in the carmaker rebounded 5% after Winterkorn’s resignation. 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”. VW later acknowledged that similar software exists in 11 million diesel cars worldwide and was setting aside €6.5-billion to cover the costs of the scandal.

The committee said it had “tremendous respect for his willingness to nevertheless assume responsibility” and added that VW’s global expansion would be “inextricably linked to his name”. As the carmaker seemed to be clearing the way to pin the scandal on workers below Winterkorn, Simon Walker, the director general of the Institute of Directors, criticised the company’s response. There is no immediate way of restoring VW’s reputation, but only total transparency can resolve the scandal and salvage its brand, said Jeremy Robinson-Leon, chief operating officer at Group Gordon, a New York-based corporate and crisis PR firm. “The most important thing is that VW comes out and tells the public what happened, who was involved and make sure that it doesn’t happen again,” he said. He wrote in the Guardian: “A company which has admitted to a flagrant violation of global rules and went to such extensive lengths to hoodwink officials has bigger questions to answer than just who takes the blame. “Fitting 11m cars with a piece of software which artificially reduces vehicle emissions during regulators’ tests is not the work of a few rogue employees.

That decision was taken and put into action by people of reasonable seniority. “If the board members knew what was happening, that is clearly severe – and possibly criminal – malpractice. The 600,000 employees of VW cannot help it that individuals carried out criminal actions on whatever scale.” “Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group,” said Winterkorn, who has led the company since 2007. “The process of clarification and transparency must continue.

I am convinced that the Volkswagen Group and its team will overcome this grave crisis.” Earlier, Prof Karel Williams of the University of Manchester business school told BBC Radio 4’s Today programme that the VW scandal reflected badly on Germany. “Germany has been lecturing the Greeks for years on how they cheated on the budget deficit calculations and now look at this – Germany’s largest company is cheating on emissions,” Williams said. Oliver Krischer, the deputy leader of the Green party, told German television that this showed the government knew that car makers were trying to manipulate emissions tests. He said: “The government worked together with the auto industry, not to ensure that the emissions levels were reduced, but so that the measuring system was set up in such a way that on paper the cars met the necessary standards.” The European Automobile Manufacturers’ Association (ACEA) said European rules will soon require testing to be conducted in realistic driving conditions as well as in laboratories, creating the strictest regime in the world. It said: “The ACEA will continue to engage with the European commission and national governments to address the current challenges and ensure that trust and confidence in the car industry and clean diesel technology are maintained.”

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