VW CEO Martin Winterkorn says he is stepping down
Washington — Embattled Volkswagen CEO Martin Winterkorn said Wednesday he is resigning in the face of the German automaker’s crisis over cheating on emissions testing in 11 million diesel vehicles worldwide.
VW’s board said it expects to make additional personnel changes as early as Friday at a board meeting — including selecting a new CEO — as it vowed a number of steps to regain consumers’ trust.
The announcement comes after the automaker set aside $7.3 billion to address the costs of the mounting scandal that came to light on Friday when the Environmental Protection Agency said VW had admitted to emitting up to 40 times allowable pollution in 482,000 2009-15 diesel cars in the United States. Software in the cars allowed pollution-control systems to function normally while being tested, but shut them off during regular driving.
In the week’s first two days, VW stock value fell 35 percent, wiping out $26 billion in market value. But the stock rebounded 7 percent on Wednesday.
“Volkswagen needs a fresh start — in terms of personnel,” Winterkorn said in a statement posted on VW’s website, adding he was taking responsibility even though he said he wasn’t aware of the cheating before it was exposed. “I am clearing the way for this fresh start with my resignation. The process of clarification and transparency must continue. This is the only way to win back trust. I am convinced that the Volkswagen Group and its team will overcome this grave crisis.”
VW faces investigations by the U.S. Justice Department, a group of state attorneys general and regulators from around the world. Numerous lawsuits have been filed by owners.
The automaker’s executive committee released a statement that said: “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.” It said: “All participants in these proceedings that has resulted in unmeasurable harm for Volkswagen, will be subject to the full consequences.”
The board statement said Winterkorn had “no knowledge of the manipulation of emissions data” and praised his “willingness to nevertheless assume responsibility and, in so doing, to send a strong signal both internally and externally.”
Winterkorn, 68, who has run VW since 2007, helped expand the group to 12 brands including Lamborghini, Bentley and Bugatti. He vowed in 2008 to triple U.S. sales to 1 million in the next decade as it strove to become the world’s largest automaker. The company expanded production worldwide to more than 100 factories, including a new plant in Chattanooga, Tennessee.
But VW has struggled in the U.S. market with its focus on cars over SUVs even as Americans shifted to larger vehicles amid falling gas prices.
In a move that angered some in Michigan, the company announced in 2007 it was moving its U.S. sales and marketing headquarters from Auburn Hills to Herndon, Virginia. The company kept some jobs in Michigan.
Earlier this year, Winterkorn told Automotive News that big changes were coming: “We are preparing the company for the coming 10, 20 years. We must become faster, more efficient and more agile.”
In recent years, he vowed an aggressive strategy to boost electric vehicles and research.
Winterkorn, who made about $20 million last year, was due for a contract extension that was expected to last until 2018.
Unlike crises to hit General Motors Co. or Toyota Motor Corp. over safety issues, this is the first in recent years to force a CEO’s departure. VW was on track in the first half of 2015 to top Toyota as world’s largest automaker.
The company faces a hearing by the U.S. House. The House could seek to get Winterkorn to testify, or his successor — or the U.S. brand chief, Michael Horn, who bluntly said Monday that the company had not been honest and had “totally screwed up.”
VW disclosed that it will submit a complaint to German prosecutors and said “criminal proceedings may be relevant due to the irregularities.”
In the United States, the company hired Chicago law firm Kirkland & Ellis, which represented BP in the Deepwater Horizon oil spill. Lead attorney Stuart Drake has represented GM and Toyota. He didn’t return a message seeking comment.
The U.S. unit, Volkswagen of America, has told U.S. dealers to halt sales of some remaining 2015 diesel vehicles that the EPA and California said violate the law.
EPA has refused to allow VW to sell its 2016 models, and now plans new tests to prevent similar cheating. But EPA Administrator Gina McCarthy said Tuesday that the government believes VW is an “outlier” and doesn’t think there is widespread cheating.
VW has made its “clean diesel” vehicles that get high miles per gallon a key part of its U.S. strategy. It has lobbied to convince federal regulators to treat diesel vehicles similarly to hybrid and other vehicles getting high gas mileage.
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