Market News & Analysis

Volkswagen chief executive resigns

Martin Winterkorn, chief executive of Volkswagen, has resigned following a discovery that the carmaker has been manipulating diesel emissions tests in the US.

In a statement, Mr Winterkorn said he was shocked by recent events, adding that although he did not believe he had done anything wrong, his departure was for the good of the company.

"I am doing this in the interests of the company, even though I am not aware of any wrongdoing on my part," he said.

"I am clearing the way for a fresh start with my resignation," he added.

Volkswagen is the world's biggest carmaker, but it has admitted to deceiving US regulators during exhaust emissions tests. A device was installed in the vehicles that would give more favourable test results – allowing its diesel cars to produce up to 40 times more pollution than normally permitted. The company has said that 11 million vehicles worldwide were involved in the scandal and it has set aside €6.5 billion (£4.7 billion) to cover associated costs.

On Friday (September 18th), shares in Volkswagen were valued at €162.20 in Frankfurt. After allegations were made against the company, shares fell 18.6 per cent on Monday and 19.8 per cent on Tuesday. On Wednesday morning, they dropped another 2.2 per cent at the open and reached their lowest point at 102.05 before recovering slightly to close at €111.95.

"Stunned"

Mr Winterkorn said he was "stunned" at the scale of the misconduct. However, he also said he believed that the carmaker would overcome the "grave crisis".

"The process of clarification and transparency must continue. This is the only way to win back trust," he said in his resignation statement.

Although Mr Winterkorn claims he knew nothing about the scandal, those involved in the car industry believe this type of deception could extend to other carmakers and other countries.

Greg Archer, a former government adviser and head of clean vehicles at the Transport & Environment thinktank said manipulation of air pollution data could be 'very widespread" and said tests in Europe are more open to abuse than those in the US.

He said he was not surprised by the scandal. "There has been a lot of anecdotal evidence about carmakers using these defeat devices. All credit to the EPA for investigating and finding the truth."

From time to time, GAIN Capital Limited’s (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.