Martin Winterkorn resigns as Volkswagen CEO

Martin Winterkorn, the embattled chief executive of Volkswagen, has announced that he is to resign following the scandal surrounding the emissions of its diesel cars.
In a statement issued by the company Winterkorn said he was "shocked by the events of the past few days."


"Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group."

A successor will determined at Friday's supervisory board meeting. However, rumors earlier suggested he might be replaced by Porsche President and CEO Matthias Muller, Audi chief Rupert Stadler and VW brand head Herbert Diess, although Volkswagen has denied this.


More people can be expected to follow Winterkorn out of the carmaker due to the scandal, a senior VW source who wished to remain anonymous due the sensitivity of the situation, told CNBC.


The world's second-largest carmaker is being engulfed by an emissions scandal which has wiped nearly 26 billion euros ($29 billion) off its market value this week. In this kind of situation, with 11 million cars potentially affected, jobs are put in jeopardy and even once-mighty companies can be permanently damaged.


The speed at which VW moved to clean the slate—five days—stands in marked contrast to the sometimes protracted recalls of other automakers.Toyota, for example, took several years over its recalls.


Volkswagen is said to have been caught cheating on U.S. air pollution tests. VW installed sophisticated software known as "defeat devices" in the electronic control module of diesel vehicles issued between 2008 and 2015.

Getty Images

Volkswagen CEO Martin Winterkorn.

 

 

Winterkorn has become the public face of the scandal, with allegations that he ignored warning signs about the emissions in 2014. In a video on the carmaker's website Tuesday, he admitted, "I do not have all the answers to the questions but we are working hard to find out exactly what happened."
 

  In stepping down Wednesday, Winterkorn said he was "not aware of any wrongdoing on my part" but had accepted the "responsibility for the irregularities that have been found in diesel engines and have therefore requested the Supervisory Board to agree on terminating my function as CEO of the Volkswagen Group."

What's unclear is whether Winterkorn knew about the installation of the defeat devices that allowed the cars to pass official environmental tests. Investors may find it unforgivable if he condoned or ordered their use—but it could be just as problematic if he did not know the devices were installed, as this would suggest a lack of oversight.


The embattled CEO seemed to have clinched a two-year contract extension earlier this year after a leadership battle with longstanding Chairman Ferdinand Piech, who all but publicly criticized the Winterkorn's performance. But Winterkorn won over shareholder support and the showdown saw Piech resign in April.

Winterkorn spent eight years at the helm of Volkswagen, but started his auto career in 1981 at Audi, serving on the board for quality assurance after an engineering stint with Bosch. He joined Volkswagen in the early 1990s in a similar quality-monitoring role, before working in product management, technical development and research roles.

"I have always been driven by my desire to serve this company, especially our customers and employees. Volkswagen has been, is and will always be my life," Winterkorn said Wednesday.

"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."
After the scandal erupted, shares tanked 18 percent Monday and nearly 20 percent Tuesday. However on Wednesday they pared some losses to trade around 6 percent higher.

Volkswagen has faced other challenges under the CEO's watch, with the most recent sales numbers showing a 1.5 percent drop in vehicle deliveries in the first eight months of 2015 compared to a year earlier and a 5.4 percent year-on-year fall in August alone.

 

  It seems Winterkorn's departure could help provide a clean slate not only for Volkswagen, but for Winterkorn himself, an executive headhunter told CNBC.

Jason Hanold, manager partner of Hanold Associates, which has hired senior leaders for Rolls-Royce, Bridgestone and Harley Davidson, said Winterkorn has a chance to wield his expertise outside the auto sector.


"Private equity and advisory firms would be an exceptional avenue, as his operational and industry knowledge is distinctive, even though his followership will clearly suffer," Hanold said.

As for the future of diesel vehicles, the German auto industry association chief told Reuters that the Volkswagen scandal shouldn't be used as an excuse to question their future.

Cr  :  CNBC

BERLIN: Volkswagen CEO Martin Winterkorn resigned on Wednesday, taking responsibility for the German carmaker’s rigging of U.S. emissions tests in the biggest scandal in its 78-year 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. He said he was shocked by events of the past few days, above all that misconduct on such a massive scale was possible at the company. A five-member executive committee had grilled Winterkorn, 68, since morning at the company’s headquarters in Wolfsburg, Germany. The company was under huge pressure to take decisive action, with its shares down more than 30 percent in value since the crisis broke, and the bad news still coming. German prosecutors said on Wednesday they were conducting a preliminary investigation into the manipulation of vehicle emission test results at Volkswagen, while French Energy Minister Segolene Royal said her country would be “extremely severe” if its investigation into the firm found any wrongdoing. U.S. authorities are planning criminal investigations 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. German Chancellor Angela Merkel had urged Volkswagen to move “as quickly as possible” to restore confidence in a company held up for generations as a paragon of German engineering prowess. SHOCKWAVES The U.S. Environmental Protection Agency (EPA) said on Friday Volkswagen could face penalties of up to $18 billion for cheating emissions tests on some of its diesel cars. The story has sent shockwaves through the car market, with dealers in the United States reporting people holding back from buying diesel cars and “#dieselgate” trending on Twitter. Diesel engines account for less than 3 percent of new cars sold in the United States but around half of cars in Europe, where governments have encouraged their use to meet fuel efficiency and greenhouse gas targets. Their biggest selling point is their fuel economy and low carbon emissions compared to standard gasoline engines. But they also emit far more nitrogen dioxide, a toxic gas blamed for health problems. The suggestion that their emissions in real world conditions are worse than reported in tests could harm the whole sector and alter the future of the car industry worldwide. “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, told CNBC, adding the “brand position” of Volkswagen was at risk in the U.S. market. Volkswagen said on Tuesday it was setting aside 6.5 billion euros ($7.3 billion) to help cover the costs of the crisis. Analysts doubt that will be enough, with the company disclosing that 11 million of its cars were fitted with Type EA 189 engines that had shown a “noticeable deviation” in emission levels between testing and road use. The U.S. Justice Department has launched a criminal probe, a source familiar with the matter said. New York and other state attorneys general are also forming a group to investigate. “INVESTOR’S NIGHTMARE“ Environmentalists have long complained that carmakers game the testing regime to exaggerate the fuel-efficiency and emissions readings of their vehicles. European politicians on Wednesday voted to speed up rules to tighten compliance with pollution limits on cars. European car association ACEA said that so far there was “no evidence that this is an industry-wide issue.” But Societe Generale analysts said that while the uncertainty prevailed, the whole autos sector was likely to be “dead money” for a while. -Reuters

Read More : http://www.nst.com.my/news/2015/09/volkswagen-boss-quits-over-diesel-scandal

BERLIN: Volkswagen CEO Martin Winterkorn resigned on Wednesday, taking responsibility for the German carmaker’s rigging of U.S. emissions tests in the biggest scandal in its 78-year 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. He said he was shocked by events of the past few days, above all that misconduct on such a massive scale was possible at the company. A five-member executive committee had grilled Winterkorn, 68, since morning at the company’s headquarters in Wolfsburg, Germany. The company was under huge pressure to take decisive action, with its shares down more than 30 percent in value since the crisis broke, and the bad news still coming. German prosecutors said on Wednesday they were conducting a preliminary investigation into the manipulation of vehicle emission test results at Volkswagen, while French Energy Minister Segolene Royal said her country would be “extremely severe” if its investigation into the firm found any wrongdoing. U.S. authorities are planning criminal investigations 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. German Chancellor Angela Merkel had urged Volkswagen to move “as quickly as possible” to restore confidence in a company held up for generations as a paragon of German engineering prowess. SHOCKWAVES The U.S. Environmental Protection Agency (EPA) said on Friday Volkswagen could face penalties of up to $18 billion for cheating emissions tests on some of its diesel cars. The story has sent shockwaves through the car market, with dealers in the United States reporting people holding back from buying diesel cars and “#dieselgate” trending on Twitter. Diesel engines account for less than 3 percent of new cars sold in the United States but around half of cars in Europe, where governments have encouraged their use to meet fuel efficiency and greenhouse gas targets. Their biggest selling point is their fuel economy and low carbon emissions compared to standard gasoline engines. But they also emit far more nitrogen dioxide, a toxic gas blamed for health problems. The suggestion that their emissions in real world conditions are worse than reported in tests could harm the whole sector and alter the future of the car industry worldwide. “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, told CNBC, adding the “brand position” of Volkswagen was at risk in the U.S. market. Volkswagen said on Tuesday it was setting aside 6.5 billion euros ($7.3 billion) to help cover the costs of the crisis. Analysts doubt that will be enough, with the company disclosing that 11 million of its cars were fitted with Type EA 189 engines that had shown a “noticeable deviation” in emission levels between testing and road use. The U.S. Justice Department has launched a criminal probe, a source familiar with the matter said. New York and other state attorneys general are also forming a group to investigate. “INVESTOR’S NIGHTMARE“ Environmentalists have long complained that carmakers game the testing regime to exaggerate the fuel-efficiency and emissions readings of their vehicles. European politicians on Wednesday voted to speed up rules to tighten compliance with pollution limits on cars. European car association ACEA said that so far there was “no evidence that this is an industry-wide issue.” But Societe Generale analysts said that while the uncertainty prevailed, the whole autos sector was likely to be “dead money” for a while. -Reuters

Read More : http://www.nst.com.my/news/2015/09/volkswagen-boss-quits-over-diesel-scandal

BERLIN: Volkswagen CEO Martin Winterkorn resigned on Wednesday, taking responsibility for the German carmaker’s rigging of U.S. emissions tests in the biggest scandal in its 78-year 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. He said he was shocked by events of the past few days, above all that misconduct on such a massive scale was possible at the company. A five-member executive committee had grilled Winterkorn, 68, since morning at the company’s headquarters in Wolfsburg, Germany. The company was under huge pressure to take decisive action, with its shares down more than 30 percent in value since the crisis broke, and the bad news still coming. German prosecutors said on Wednesday they were conducting a preliminary investigation into the manipulation of vehicle emission test results at Volkswagen, while French Energy Minister Segolene Royal said her country would be “extremely severe” if its investigation into the firm found any wrongdoing. U.S. authorities are planning criminal investigations 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. German Chancellor Angela Merkel had urged Volkswagen to move “as quickly as possible” to restore confidence in a company held up for generations as a paragon of German engineering prowess. SHOCKWAVES The U.S. Environmental Protection Agency (EPA) said on Friday Volkswagen could face penalties of up to $18 billion for cheating emissions tests on some of its diesel cars. The story has sent shockwaves through the car market, with dealers in the United States reporting people holding back from buying diesel cars and “#dieselgate” trending on Twitter. Diesel engines account for less than 3 percent of new cars sold in the United States but around half of cars in Europe, where governments have encouraged their use to meet fuel efficiency and greenhouse gas targets. Their biggest selling point is their fuel economy and low carbon emissions compared to standard gasoline engines. But they also emit far more nitrogen dioxide, a toxic gas blamed for health problems. The suggestion that their emissions in real world conditions are worse than reported in tests could harm the whole sector and alter the future of the car industry worldwide. “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, told CNBC, adding the “brand position” of Volkswagen was at risk in the U.S. market. Volkswagen said on Tuesday it was setting aside 6.5 billion euros ($7.3 billion) to help cover the costs of the crisis. Analysts doubt that will be enough, with the company disclosing that 11 million of its cars were fitted with Type EA 189 engines that had shown a “noticeable deviation” in emission levels between testing and road use. The U.S. Justice Department has launched a criminal probe, a source familiar with the matter said. New York and other state attorneys general are also forming a group to investigate. “INVESTOR’S NIGHTMARE“ Environmentalists have long complained that carmakers game the testing regime to exaggerate the fuel-efficiency and emissions readings of their vehicles. European politicians on Wednesday voted to speed up rules to tighten compliance with pollution limits on cars. European car association ACEA said that so far there was “no evidence that this is an industry-wide issue.” But Societe Generale analysts said that while the uncertainty prevailed, the whole autos sector was likely to be “dead money” for a while. -Reuters

Read More : http://www.nst.com.my/news/2015/09/volkswagen-boss-quits-over-diesel-scandal

Volkswagen’s Chief in the Vortex of the Storm

Martin Winterkorn, Volkswagen’s chief executive, facing shareholders in Hanover, Germany, in May. He now faces scrutiny over VW’s admission that it faked emissions testing. Credit Alexander Koerner/Getty Images

Striding past a car show model, Martin Winterkorn, trailed by aides, examined a Hyundai i30.

He poked the hatchback with a measuring device he had in his pocket, then squeezed his stocky frame into the driver’s seat. He ran a finger along the interior plastic, then fiddled with the adjustable steering wheel.

“It doesn’t clank,” Mr. Winterkorn said to a member of his entourage, with a note of annoyance in his voice. “BMW can’t do it. We can’t do it. They can.”

The scene from the Frankfurt auto show in 2011, captured on a YouTube video that has gone viral, has become famous as an illustration of the Volkswagen chief executive’s attention to detail and his insistence on technical excellence.

It was a display of the determination that helped Mr. Winterkorn, 68, lead Volkswagen past Toyota in the number of cars sold this year, making it the world’s largest carmaker — at least for now.

But now Mr. Winterkorn’s detail mania could become a liability, as he faces mounting scrutiny over the revelation that millions of diesel models contained software designed to evade emissions regulations.

Photo

Mr. Winterkorn, 68, led Volkswagen past Toyota in the number of cars sold this year, making it the world’s largest automaker. Credit Christian Charisius/Reuters

The widening scandal has become a threat to the empire that Mr. Winterkorn helped build with his onetime mentor, Ferdinand Piëch. Though it still manufactures the kind of practical cars for the masses that made Volkswagen famous, the company today also makes Porsche and Lamborghini sports cars, Bentley luxury cars and over-the-top Bugatti sports cars that sell for more than $1 million.

Until the deception became public on Friday, Mr. Winterkorn’s future with Volkswagen had seemed more or less secure after he emerged the victor of a bitter power struggle this year that ended with the ouster of Mr. Piëch, the company’s longtime chairman, who was sometimes described as Mr. Winterkorn’s stepfather.

Mr. Piëch, a member of the powerful Porsche family that owns a significant stake in Volkswagen, began pressing for Mr. Winterkorn’s ouster in March — ostensibly because he was unhappy with the company’s failure to expand its market share in the United States.

But Mr. Piëch’s campaign to remove Mr. Winterkorn failed to win the support of other key Volkswagen shareholders, including a cousin, Wolfgang Porsche, as well as the German state of Lower Saxony, which owns a 20 percent stake. In April, Mr. Piëch — a grandson of the creator of the VW Beetle — stepped down.

With Mr. Piëch’s influence diminished, Mr. Winterkorn pushed ahead with a strategy of improving profit margins at Volkswagen, which continues to struggle to make inroads in the United States and whose growth has stalled in emerging markets like Brazil, China and Russia. The plan includes the discontinuation of unprofitable VW models and the slashing of 5 billion euros, or about $5.5 billion, in operating costs by the end of 2017.

Just two weeks ago, a steering committee of the board had voted unanimously to extend Mr. Winterkorn’s mandate, which was due to finish in 2016, until the end of 2018.

Volkswagen’s traditional culture of highly centralized decision-making could make it difficult for Mr. Winterkorn to deflect suspicions that he and other senior managers at the company’s headquarters in Wolfsburg, Germany, were unaware of the software manipulations at the heart of the scandal, experts say.

“This wasn’t a small engineering decision that slipped by management,” said Jo-Ellen Pozner, an assistant professor at the Haas School of Business at the University of California, Berkeley. “It seems to me like something had to be approved by at least a division head.”

With an annual salary of more than €16 million, Mr. Winterkorn is Germany’s highest-paid chief executive. Since taking the helm in 2007 — before the software began appearing in the 2009 model year diesel cars — he has enjoyed the support of Chancellor Angela Merkel as well as the automaker’s powerful workers’ council. But on Tuesday, it was not clear whether Mr. Winterkorn, whom colleagues refer to by the nickname Wiko, would be able to count on their continued support.

“If it emerges that Winterkorn was involved in the issue, then he would step down on his own,” Bernd Osterloh, a Volkswagen board member and labor leader who has until now been an ally of Mr. Winterkorn, told reporters in Frankfurt on Tuesday. “We can’t afford such reputational damage.”

Mr. Winterkorn has nurtured a passion for cars since his childhood in Leonberg, in southwestern Germany, home to a Porsche test site where he used to watch the German sports car maker’s autos whiz by on a track near his home.

Mr. Winterkorn, who was born in 1947, studied metallurgy and physics at the University of Stuttgart, later earning a doctorate in metal physics.

Mr. Winterkorn began his working life at Bosch, the German engineering and electronics group, and in 1981 entered the automobile industry as a quality controller at Audi, one of the Volkswagen group’s stable of 12 brands.

For 30 years, he worked successfully alongside Mr. Piëch, once describing their relationship as a partnership where Mr. Piëch was responsible for conceiving new ideas while Mr. Winterkorn was in charge of transforming them into roadworthy vehicle designs.

Yet despite decades of working together, the two men never became close friends, always maintaining a professional distance and addressing one another using the formal German word for you, “Sie.”

All the while, Mr. Winterkorn has determinedly raised his public profile, appearing at industry events like the annual Detroit auto show and giving bold proclamations at lavish corporate presentations.

At the show in 2013, he captivated a large contingent of journalists at an invitation-only event scheduled the night before press previews at the show.

“VW won’t cut back,” he said. “We will stay in the fast lane,” he added, referring to the company’s growth plans in America. “VW grows with the challenges. And we continue to do so, even when times are tough.”

One executive within VW, who spoke on condition of anonymity, described Mr. Winterkorn as extremely meticulous about technology and how the company’s cars were marketed to the public.

The executive said that employees waited nervously for Mr. Winterkorn’s ceremonial tour of the company’s auto show exhibits.

Always accompanied by teams of support personnel, he was known for closely examining every car on display, from the type of wheels to the interior color combinations.

“It was like the general had arrived to inspect the troops,” the executive said.

Mr. Winterkorn, a Porsche family outsider, has managed to maintain his position by carefully navigating the often-complex machinations of various factions that have jousted for control of the group.

In 2005, Porsche set out on a cunning plan to conquer the much larger Volkswagen. But that plan required borrowing billions of euros — a move that enlarged its debt load two years later, just as global capital markets froze up when the global financial crisis hit.

Financially weakened, Porsche was forced to accept integration into Volkswagen in 2008, further consolidating Mr. Winterkorn’s power. Volkswagen ultimately assumed full ownership of the Porsche brand in 2012.

Now made vulnerable by the scandal, it remains unclear whether Mr. Winterkorn can count on the continued support of past allies, who include Stephan Weil, the prime minister of Lower Saxony who told reporters on Tuesday that he did not wish to “prejudge future discussions” about Mr. Winterkorn’s future at Volkswagen or discuss any “possible consequences.”

Cr  :   NICOLA CLARK and MELISSA EDDY / New York Times