Volkswagen CEO resigns over U.S. emissions scandal

The Chief Executive Officer of Volkswagen, Martin Winterkorn, was on Wednesday compelled to resign his appointment after accepting responsibility over the fraudulent U.S. emissions tests, the biggest scandal in its 78-year history.

The U.S. Environmental Protection Agency, EPA, said the German car manufacturing firm could incur sanctions of up to $18 billion for cheating emissions tests on some of its diesel cars.

U.S. government is considering criminal investigations after discovering that Volkswagen had programmed computers in its cars to detect when being tested and alter the running of their diesel engines to conceal their true emission levels.

German prosecutors said on Wednesday they were conducting a preliminary investigation into the manipulation of vehicle emission test results at Volkswagen.

A five-member executive committee had grilled Mr. Winterkorn at the company’s headquarters in Wolfsburg, Germany, with the company coming under intense pressure on the heels of the scandal.

In a brief statement to announce his immediate resignation, the former Volkswagen boss said he was taking his exit, because the company needed a fresh start, particularly in terms of personnel.

“I am clearing the way for this fresh start with my resignation,” Mr. Winterkorn said, expressing shock by recent events, particularly the misconduct on such a massive scale was possible at the company.

Diesel engines account for less than three percent of new cars sold in the United States, and almost half of cars in Europe, where governments encourage their use to meet fuel efficiency and greenhouse gas targets.

Although the biggest selling point was the cars’ fuel economy and low carbon emissions compared to standard gasoline engines, they also emit far more nitrogen dioxide, a toxic gas responsible for most health problems.

Volkswagen said on Tuesday it was setting aside 6.5 billion euros ($7.3 billion) to help cover the costs of the crisis.

The company said no fewer than 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.

Mr. Winterkorn had put in more than 20 years at Volkswagen AG, during which he rose rapidly through the ranks to lead the car firm.

Volkswagen’s apparent intentional and widespread efforts to deceive regulators worldwide suggest a dark side to the company’s growth, analysts said on Tuesday.

“It is either this activity has been going on for years, meaning Mr. Winterkorn had full knowledge of the deception, and approved it, or he was negligent in uncovering and stopping it. Either the situation reflects poorly on Mr. Winterkorn and his leadership skills, and given the tragic impact this scandal will have on the company, his resignation wasn’t just likely, but necessary.

Indications are that more casualties from the scandal are likely to go after Martin Winterkorn’s resignation, with more news expected after Friday’s board meeting.