Volkswagen lost almost a quarter of its market value after it admitted to cheating on US air pollution tests for years, putting pressure on chief executive Martin Winterkorn to fix the damaged reputation of the world’s biggest car maker.
The shares plunged up to 23% yesterday in Frankfurt trading, extending the stock’s slump for the year to 31%. The drop wiped out about €15.6bn in value.
The company halted sales of the models involved on Sunday and said it’s co-operating with the probe and ordered its own external investigation into the issue.
Mr Winterkorn, who has led the company since 2007, said he was “deeply sorry” for breaking the public’s trust and that Volkswagen would do “everything necessary in order to reverse the damage this has caused.”
Mr Winterkorn, whose contract renewal is scheduled for a supervisory board vote on Friday, now faces a serious challenge to his leadership, said Arndt Ellinghorst, a London-based analyst for Evercore ISI.
The US charges are grave and must be clarified swiftly, said Stephan Weil, prime minister of the German state of Lower Saxony, which owns 20% of Volkswagen’s voting shares.
“Possible consequences can be decided after that,” he said. The European Commission also said it’s taking Volkswagen’s cheating seriously and is in contact with US regulators and the company about details of the case.
The companys reputation for German engineering were cornerstones of Me Winterkorn’s effort to catch up in the US market. The violations, which affect nearly half a million vehicles, could result in an $18bn (€15.9bn) fine.
Criminal prosecution is also possible.
“If this ends up having been structural fraud, the top management in Wolfsburg may have to bear the consequences,” said Sascha Gommel, a Frankfurt-based analyst for Commerzbank.
The Wolfsburg-based company admitted to fitting its US diesel vehicles with software that turns on full pollution controls only when the car is undergoing official emissions testing, the US Environmental Protection Agency said last Friday. nBloomberg
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