Volkswagen chief executive Martin Winterkorn resigned Wednesday
as a growing scandal over falsified emissions tests rocked the world's biggest
carmaker. He said he was stunned by the scale of the misconduct and was
accepting responsibility to clear the way for a "fresh start" for the
The scandal broke Friday when U.S. regulators said the
German company had deliberately programmed some 500,000 vehicles to emit lower
levels of harmful emissions in official tests than on the roads. It exploded
into a global crisis Tuesday when Volkswagen said its internal
investigations had found significant emissions discrepancies in 11 million
diesel vehicles worldwide.
The company's stock price has crashed, causing big losses
for investors such as the Gulf state of Qatar, and trust has been shaken in a
brand that is at the heart of German manufacturing and exports. Volkswagen,
which also owns the Audi and Porsche brands, overtook Toyota earlier
this year to become the world's biggest automaker by vehicle sales.
Winterkorn had apologized profusely, twice, and the company
has set aside 6.5 billion euros ($7.3 billion) to cover the cost of recalls and
other efforts to limit the damage, trashing its profit forecast for the year in
the process. But the final bill could be much higher. The company faces civil
and possible criminal fines in the U.S. that are likely to total billions of
dollars. And it's unclear yet whether it will have to issue massive recalls in
It's hard to overstate the significance of the crisis in
Germany, where making quality cars is central to the country's reputation as a
manufacturing and export powerhouse. The auto industry accounts for about 20%
of exports, and employs 775,000 people directly.
German Chancellor Angela Merkel described the situation at
Volkswagen as "difficult" and urged the company to show complete
transparency and explain its actions in full. Britain and France have called
for a Europe-wide investigation, and Italy wants to know whether it has been
Regulators in the U.S. said Volkswagen cheated on
environmental standards by programming engine management software in some
diesel cars to turn on emission controls only when being tested. Cars equipped
with the device would run up to 40 times more emissions when on the road, the
Volkswagen has been ordered to recall the vehicles, and the
company is halting sales of some cars in the U.S. The scandal has also dragged
down shares in other carmakers and suppliers on fear the fallout could affect
the wider industry.
A European environmental group issued a report earlier this
month that suggested other manufacturers may be using technology that allow
their diesel cars to appear cleaner in official tests than in normal road conditions.
The ACEA, which represents 15 automakers in Europe, said Wednesday that there
was no evidence that this is "an industry-wide issue."
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