Northwest Arkansas Democrat-Gazette
CEO resigns to give VW a ‘fresh start’
BERLIN — Volkswagen Chief Executive Officer Martin Winterkorn resigned Wednesday, days after admitting that the world’s top-selling carmaker had rigged diesel emissions to pass U.S. tests.
No successor was announced.
Volkswagen’s smog-test software bypass has wiped out billions of dollars in Volkswagen’s market value and prompted prosecutors to start criminal investigations.
In a statement, Winterkorn took responsibility for the “irregularities” found by U.S. inspectors in Volkswagen’s diesel engines.
“I am doing this in the interests of the company even though I am not aware of any wrongdoing on my part,” his statement said. “Volkswagen needs a fresh start. … I am clearing the way for this fresh start with my resignation.”
Winterkorn, 68, resigned after a crisis meeting of the Volkswagen supervisory board’s executive committee. Its acting chairman, Berthold Huber, said company directors are “resolved to embark with determination on a credible new beginning.”
Huber said a successor will be discussed at a board meeting Friday that was originally intended to approve extending Winterkorn’s contract through 2018.
A source familiar with the situation said possible replacements for Winterkorn include Matthias Mueller, head of the Porsche brand, who has the support of the family that controls a majority stake of Volkswagen; and Herbert Diess, who recently joined the company from rival BMW AG.
The company expects more executives to be targeted in the coming days in its investigation, the executive committee of the supervisory board said in a statement.
In the statement, the executive committee exonerated Winterkorn, Volkswagen’s
boss since 2007, of involvement in the emissions-test manipulations.
Huber said “Mr. Winterkorn had no knowledge of the manipulation of emission values,” and he praised the departing CEO’s “readiness to take responsibility in this difficult situation for Volkswagen.”
Volkswagen reversed its market slide Wednesday, its shares rose 6.9 percent to $ 132.99. But Volkswagen’s share price has a long way to go to recoup this week’s losses.
Nearly $28 billion in market value was wiped out in the first two days of trading after the U.S. Environmental Protection Agency revealed that Volkswagen has been violating the Clean Air Act and could be subject to fines of as much as $18 billion.
The EPA disclosed Friday that stealth software makes Volkswagen’s 2009-15 model cars powered by 2.0-liter diesel engines run cleaner during emissions tests than in actual driving.
The EPA accused Volkswagen of installing the “defeat device” in 482,000 cars sold in the U.S.
Volkswagen later acknowledged that similar software exists in 11 million diesel cars worldwide and that it was setting aside $7.3 billion to cover the costs of fines, recalls and lawsuits.
The wrongdoing stands out from other auto scandals for its years of cheating and lying to hide pollution from diesel cars, and for the company’s admission of guilt right after the investigation became public Friday.
Once the billion- dollar fines and lawsuits and recall expenses are tallied, it may also eclipse other scandals in its damage to the brand and its bottom line, said Jack Nerad, executive editorial director and executive market analyst for Kelley Blue Book.
“The Volkswagen scandal has escalated far beyond the realm of recent safety recall issues that have affected other companies,” he said. “With VW’s market capitalization down by a third and rumors of criminal investigations popping up … the VW board obviously feels compelled to do some quick triage to stem the bleeding.”
Stephan Weil, the governor of Lower Saxony state, which holds a 20 percent stake in Volkswagen, is filing a criminal complaint, “because we have the impression that criminally relevant actions may have played a role here.”
Weil, also a Volkswagen director, promised to “clear up these events with all the possibilities we have inside the company and ensure that those involved are punished severely.”
The prosecutors’ office in Braunschweig, near Volkswagen’s Wolfsburg headquarters, confirmed that it is weighing an investigation of Volkswagen employees.
Other governments from Europe to South Korea have begun their own inquiries, and law firms have already filed class-action lawsuits on behalf of customers.
There is no immediate way of restoring Volkswagen’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 public relations 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.
U. S. regulators raised questions about Volkswagen’s diesel emissions in March 2014 and insisted on answers for another 18 months before the company finally acknowledged installing the stealth software.
The company has yet to reveal what its digital records show about who developed, wrote and tested the code, under whose direction, and why.
German authorities also insisted on answers Wednesday as they sought to limit the effect on Europe’s largest economy.
German economic minister Sigmar Gabriel said it’s important that the scandal be cleared up quickly and “the consequences are drawn.” But he cautioned against casting doubt on the quality of Volkswagen as a whole or the rest of the country’s auto industry.
“The damage that some people have unleashed for the company and its employees is huge — but I think we should take care not to make a general debate about the quality of Volkswagen or the whole German auto industry out of this,” Gabriel said at the Frankfurt auto show.
“‘Made in Germany’ stands for excellent products,” insisted Ulrich Grillo of the Federation of German Industries.
German economic minister Sigmar Gabriel said it’s important that the scandal be cleared up quickly and “the consequences are drawn.”