Daily Management Review

Volkswagen Chief Quits Faced with Worst Crisis in its 78 year old History


09/23/2015




Amidst worldwide criticism of hoaxing the environment emission norms in et US and facing hefty penalty apart from losing both hare prices and face, the Volkswagen CEO Martin Winterkorn resigned on Wednesday, taking responsibility for the German carmaker's recent historic debacle in its 78-year old history.

"Volkswagen needs a fresh start - also in terms of personnel. I am clearing the way for this fresh start with my resignation," Winterkorn said in a statement.

While admitting the fact on Friday, on Wednesday he said that he was shocked by events of the past few days, above all that misconduct on such a massive scale was possible at the company.

Winterkorn, 68, was grilled since Wednesday morning about the issue that has rocked the auto world, since morning at the company's headquarters in Wolfsburg, Germany. With its shares down more than 30 percent in value since the crisis broke, the company was under huge pressure to take decisive action.
Germany announced a preliminary investigation into the manipulation of vehicle emission test results at

Volkswagen on Wednesday while the French government talked about "extremely severe" action if its investigation into the firm found any wrongdoing, said that French Energy Minister Segolene Royal.


After discovering that Volkswagen programmed computers in its cars to detect when they were being tested and alter the running of their diesel engines to conceal their true emissions, the US authorities are contemplating taking criminal action against and initiating criminal investigations against Volkswagen.  
To restore confidence in a company held up for generations as a paragon of German engineering prowess, German Chancellor Angela Merkel had urged Volkswagen to move "as quickly as possible".

The fact that Volkswagen could face penalties of up to $18 billion for cheating emissions tests on some of its diesel cars was announced by the U.S. Environmental Protection Agency (EPA) on Friday.

While "#dieselgate" gained top Twitter handle status on Wednesday, the incident has sent shockwaves through the car market with dealers in the United States reporting people holding back from buying diesel cars.
 

While less than 3 percent of new cars sold in the United States have diesel engines, the number is around half in Europe where governments have encouraged the use of diesel cars with the aim of meeting fuel efficiency and greenhouse gas targets.

"The Volkswagen issue is another blackeye for the diesel engine overall," Mike Jackson, the chief executive of the AutoNation, the largest U.S. car retailer, is reported to have told CNBC.

On Tuesday, Volkswagen had announced that the company was setting aside 6.5 billion euros or $7.3 billion to help tide over the costs of the crisis.

The company had also announced that the Type EA 189 engines had shown a "noticeable deviation" in emission levels between testing and road use and it that very same engine was fitted into 11 million of its cars worldwide.

 (Source:www.reuters.com) 






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