VW CEO steps down amid diesel-emissions revelation

Volkswagen CEO Martin Winterkorn is stepping down amid charges that the company manipulated its diesel-engined cars to meet emissions regulations around the world, in an official announcement yesterday.

Winterkorn has led VW since 2007 and managed the carmaker’s staggering worldwide growth. His resignation comes within a week of the U.S. Enivironmental Protection Agency (EPA) alleging that VW has been cheating on diesel emissions testing since 2009, and that its cars might emit “up to 40 times” more pollutants than legally allowed. The EPA says about 482,000 vehicles are affected in the United States, and VW estimates at least 11 million vehicles globally might have the software that allows the vehicles to cheat emissions regulations. Petrol-engined vehicles and the GCC market in general are unaffected.

The issue came to light last week after the work of researchers at West Virginia University detailed the software manipulation designed to beat EPA tests. The company has set aside US$ 7.3 billion to deal with the fallout, while in the States, the company faces a fine of US$ 18 billion, though it appears unlikely it would be forced to pay the full amount.

To put it simply, the diesel cars turn on pollution-reduction systems when it detects an emissions test, and turn off the pollutant-reduction systems when the car is driven normally, so that the driver gets more performance out of their cars. To car enthusiasts, it almost seems like the owners of these cars wouldn’t mind retaining the better performance.

This isn’t the first time a carmaker has been caught up in deception though. While the VW scandal isn’t a safety issue, there have been much larger breaches of public trust.

Last year, General Motors recalled about 30 million cars due to faulty ignition switches, which could shut off the engine during driving and thereby prevent the airbags from inflating. The company paid compensation for 124 deaths. The fault had been known to GM for at least a decade prior to the recall being declared. General Motors agreed to pay US$ 900 million to end a criminal inquiry on its intentional delay on recalls, aside from US$ 3 billion in lost shareholder value at the time, although new CEO Mary Barra got to keep her job as the deception happened before her time.

In another incident back in 2012, Hyundai-Kia were put under the microscope for advertising best-in-class fuel economy of “40 MPG” for several models when in reality none of the cars were achieving as much. As compensation to appease the EPA, they sent out petrol cards to over 900,000 owners.

Update: Porsche Chairman Matthias Muller has officially been named the new VW Group CEO.