US Volkswagen shares close to touching 4-year low
Volkswagen’s shares have plummeted more than 30 percent after the U.S. Environmental Protection Agency (EPA) found that the company had used illegal software to evade the emission testing standard. At the stock's lowest point, the company is facing more than US$30 billion (AU$42.87 billion) wipe-off in its market value since the scandal began.
Reuters reported that the company’s share closed 5.2 percent, finishing at 111.5 euros (AU$178.29), very close to a four-year low of 95.51 euros (AU$152.73). Meanwhile, German Chancellor Angela Merkel has urged Volkswagen to find out ways to restore confidence in the company, which is known for its engineering prowess.
On Tuesday, Volkswagen admitted that 11 million diesel cars worldwide had been installed with a pollution test-cheating “defeat device”. The U.S. and car dealers, shocked by the incident, have asked people not to buy diesel cars for now.
Volkswagen Chief Executive Martin Winterkorn submitted his resignation on Wednesday after attending several lengthy meetings, claiming responsibility for using illegal software in the company’s diesel powered cars to evade the emission test standards. He said the company needed a fresh start, which can only happen with his resignation.
Failing to comply with federal clean air rules, the company has been directed to pay US$37,500 (AU$52148.63) for each car, reported Reuters. However, Volkswagen is not alone in this allegation, reported the EPA; Audi diesel cars have been also involved. As many as 48,000 four-cylinder Volkswagen and Audi diesel vehicles produced between 2009 and 2015 could be recalled.
Many European and Asian countries have also started investigations into Volkswagen. Senior members of Volkswagen state that they are now hoping to find out the actual culprit.
This is the biggest scandal Volkswagen has faced in its 78 years of service.
"The magnitude of this scandal did not leave another option," said Metzler equities analyst Juergen Pieper of Winterkorn's departure. While Volkswagen reported that they are trying to set aside 6.5 billion euros (AU$10.40 billion) to cover the charges, analysts have expressed doubts as the company not only faces the charges of the cars that are to be recalled but also regulatory fines, lawsuits, criminal investigations and a possible hit to sales following the crisis.
No new chief has been announced in the meantime, but the company will propose new appointments at this Friday’s full board meeting. However, Tagesspiegel newspaper has reported that Matthias Mueller, who heads the company's Porsche sports car business, might replace Winterkorn.
Winterkorn, who had been in charge of Volkswagen U.S. for eight years, has witnessed the company flourish with sky-touching sales and profit. Post-resigning, he said that he was shocked by the misconduct and wasn’t aware of any wrongdoing on his own part.
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