German Chancellor Angela Merkel has called for Volkswagen to move "as quickly as possible" to restore confidence in a company held up for generations as a paragon of German engineering excellence.
Volkswagen chief executive Martin Winterkorn faces a reckoning with his board on Wednesday, summoned to explain the falsification of US emissions tests in the biggest scandal in the 78-year history of the world's largest carmaker.
Volkswagen said 11 million of its vehicles worldwide contained the so-called “defeat device” that allowed the cars to beat the testers. The revelation is an increase from the 482,000 cars identified by the US’s Environmental Protection Agency.
A source close to the company said a five-member executive committee was grilling Mr Winterkorn at the company's headquarters in Wolfsburg, Germany, and was likely to make a recommendation on his future ahead of a full board meeting on Friday.
Volkswagen is under huge pressure to act, with its shares down more than a third in value since the crisis broke. But the board is in a tricky situation, with the 68-year-old CEO showing no sign of resigning after a hitherto highly successful eight-year reign, in which the company doubled its sales and almost tripled its profits. “
VW needs a fresh start and in our view a new CEO," said Evercore ISI analyst Arndt Ellinghorst. A story in the Tagesspiegel newspaper, denied by Volkswagen, said the board would replace him with Matthias Mueller, head of the automaker's Porsche sports car business.
Contract extension
Mr Winterkorn, who was due to have his contract extended at Friday’s board meeting, did not mention his future in a video message posted on the company’s website on Tuesday, in which he repeated his apology for a scandal which has wiped out tens of billions of dollars from the company’s value.
Deutsche Bank called the scandal an “investor’s nightmare” and cut its recommendation to “hold” from “buy”, predicting rising costs for making diesel cars would wipe out the company’s cost-cutting programme.
The scandal has also snared VW's premium brand Audi, but has cast a shadow over its empire of 12 brands spanning motorbikes to trucks.
In the firm’s historic home of Wolfsburg, Martin Winterkorn, VW chief executive, said he was “endlessly sorry” the company had betrayed its customers’ trust. In nearby Hanover, the Lower Saxon government, which controls a fifth of voting shares, demanded to know “when this manipulation was initiated, by whom and why it was not discovered until now”.
The shock over the VW scandal sparked crisis news specials in Germany on Tuesday and pushed the EU refugee crisis into second place.
Volkswagen is seen as more than a company, it is the calling card of Germany PLC abroad.
- Additional reporting Bloomberg
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