Volkswagen (VLKAY) CEO Resigns Due to Emissions Scandal
Shares of Volkswagen Group (VLKAY) were trading down -0.51 or -1.88 percent to $26.59 per share in Thursday’s premarket after the company’s Chief Executive Officer resigned yesterday amid a scandal that involved cheating on emissions readings in the company’s diesel engines. Volkswagen stock closed at $27.10 per share, up +1.66 or +6.53 percent in Wednesday’s regular trading session.
The Volkswagen Group currently sells passenger vehicles under the Audi, Bugatti, Bentley, Porsche, Lamborghini, Skoda and SEAT brands and motorcycles under the Ducati brand, in addition to the Volkswagen name. The company has maintained the largest market share for automobiles in Europe for the past twenty years and was responsible for producing 10.1 million vehicles in 2014. Volkswagen operates in 150 countries and has 100 production plants in 27 countries.
Martin Winterkorn, who has been at the helm of the company since 2007, tendered his resignation after the company admitted last week that it had equipped some of its Audi and Volkswagen diesel cars with software that manipulated results of routine emissions tests. The U.S. Environmental Protection Agency disclosed the news last Friday.
In a statement released yesterday, Mr. Winterkorn noted that, “I am 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. As CEO I accept 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. I am doing this in the interests of the company even though I am not aware of any wrong doing on my part. Volkswagen needs a fresh start – also in terms of personnel. I am clearing the way for this fresh start with my resignation.”
Volkswagen said on Tuesday that as many as 11 million vehicles worldwide could be equipped with the software but was unclear as to whether the software could deceive emissions regulators in other countries. The software reportedly sensed when the car was being tested for emissions, reducing emissions during the test but then increasing emissions above legal limits during normal driving. This would improve the car’s performance and possibly save on gasoline consumption.
The company’s executive committee of the supervisory board has yet to name a successor, however, the German press is speculating on three potential candidates. The candidates include Mathias Miller, in charge of the Porsche division, Rupert Stadler, head of the Audi division and, outside of the company, Wolfgang Bernhard who heads up the truck division at Daimler.
Shares of Volkswagen were hit hard after the Obama administration told the company to recall a half million vehicles on Friday. The stock gained almost seven percent yesterday but is still down significantly from its Friday closing price.
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