Just in time for Oktoberfest.
Volkswagen's official media website has just released a short statement from Prof. Dr. Martin Winterkorn. The man who's been at the helm of the company for the past seven years says he accepts responsibility for the huge scandal regarding manipulated diesel emissions and will step down from his position.
Until the Supervisory Board board meets on Friday, Winterkorn is still the official CEO. But there is little he can do except help play his part in reducing the damage caused to the brand.
"I am doing this in the interests of the company even though I am not aware of any wrong doing on my part," he says.
Even though he denies any involvement, Winterkorn's name will forever be associated with Dieselgate. That's why a new face is needed if loyal customers are ever going to regain their trust.
In a previous statement, the same official said the following: "The irregularities that have been found in our Group’s diesel engines go against everything Volkswagen stands for. At present, we do not yet have all the answers to all the questions. But we are working hard to find out exactly what happened. To do that, we are putting everything on the table, as quickly, thoroughly and transparently as possible. And we continue to cooperate closely with the relevant government organizations and authorities."
The full ramifications of the TDI scandal are yet to be revealed, as the EPA has also begun investigating larger 3-liter TDI engines fitted to Audi or Porsche models. Other companies might also use similar systems to artificially lower emissions and comply to the standard.
One thing is for sure, this will not be a quick fix. Some of the models involved were found to pollute up to 40 times more than the legal limit. Passat models that have AdBlue installed on their 2.0 TDI engines were a lot better, but still came between 5 to 15 times the legal limit.
Volkswagen said yesterday that it was setting aside €6.5 billion ($7.3 billion) to cover the damages caused by the Dieselgate scan. However, most would agree that's nowhere near enough, as it means only €590 for each one of the 11 million potentially flawed TDI engines. In addition, the EPA could impose a historic $18 billion fine.
European company branches have told their customers new cars with Euro 6 engines fully comply with EU regulation. Only when the dust settles will we know how many of the 11 million cars affected need serious modifications and how those might affect performance or consumption.
Reports suggest Porsche Chief Executive Officer Matthias Müller will replace Winterkorn. We'll know more on Friday, when the head o sa special task-force to oversee this scandal will also be named.
Shares rise 5% in Germany
Volkswagen AG has been a nightmare for investors and share holders. Stocks fell from nearly €170 down to just €106 in a matter of two days. However, Volkswagen is currently up 5.5% today, pulling the DAX German index with it.
Die Welt reports that the German Government and European Union both knew Volkswagen was rigging emissions tests and failed to take action. In an official statement, German Chancellor Angela Merkel urged Volkswagen to take swift action and rectify the situation. Considering many of the 600,000 people that work for the company are German, her concern is not unfounded.
Meanwhile, French Energy Minister Segolene Royal said she would take "extremely severe" measures if Volkswagen was found with similar emissions rigging devices in her country. Even the South Korean government has started an separate inquiry.
Statement from the Executive Committee of Volkswagen AG's Supervisory Board
In a meeting on Wednesday, September 23, the Executive Committee of the Supervisory Board of Volkswagen AG discussed in detail the manipulation of emissions data of Volkswagen Group diesel engines and came to the following conclusions:
1. The Executive Committee takes this matter extremely seriously. The Executive Committee recognizes not only the economic damage caused, but also the loss of trust among many customers worldwide.
2. The Executive Committee agrees that these incidents need to be clarified with great conviction and that mistakes are corrected. At the same time, the Executive Committee is adamant that it will take the necessary decisive steps to ensure a credible new beginning.
3. The Executive Committee has great respect for Chairman Professor Dr. Winterkorn's offer to resign his position and to ask that his employment agreement be terminated. The Executive Committee notes that Professor Dr. Winterkorn had no knowledge of the manipulation of emissions data. The Executive Committee has tremendous respect for his willingness to nevertheless assume responsibility and, in so doing, to send a strong signal both internally and externally. Dr. Winterkorn has made invaluable contributions to Volkswagen. The company's rise to global company is inextricably linked to his name. The Executive Committee thanks Dr. Winterkorn for towering contributions in the past decades and for his willingness to take responsibility in this criticall phase for the company. This attitude is illustrious.
4. Recommendations for new personnel will be presented at the upcoming meeting of the Supervisory Board this Friday.
5. The Executive Committee is expecting further personnel consequences in the next days. The internal Group investigations are continuing at a high tempo. All participants in these proceedings that has resulted in unmeasurable harm for Volkswagen, will be subject to the full consequences.
6. The Executive Committee have decided that the company will voluntarily submit a complaint to the State Prosecutors' office in Brunswick. In the view of the Executive Committee criminal proceedings may be relevant due to the irregularities. The investigations of the State Prosecutor will be supported in all form from the side of Volkswagen.
7. The Executive Committee proposes that the Supervisory Board of Volkswagen AG create a special committee, under whose leadership further clarifying steps will follow, including the preparation of the necessary consequences. In this regard, the Special Committee would make use of external advice. Further details about this will be decided at the Supervisory Board meeting on Friday.
8. The Executive Committee is aware that coming to terms with the crisis of trust will be a long term task that requires a high degree of consistency and thoroughness.
9. The Executive Committee will work on these tasks together with the employees and the Management Board. Volkswagen is a magnificent company that depends on the efforts of hundreds of thousands of people. We consider it our task that this company regains the trust of our customers in every respect