WRAPUP 10-Volkswagen says 11 mln cars hit by scandal, probes multiply
22-09-2015 20:52
(Adds report about supervisory board meeting to consider
Winterkorn's fate)
* Volkswagen denies report, CEO says he's sorry
* Company says 11 million cars could be affected by scandal
* Sets aside 6.5 bln euros, says amount could rise
* Up to $30 bln wiped from market cap
By Andreas Cremer
BERLIN, Sept 22 (Reuters) - Volkswagen AG said a
scandal over falsified U.S. vehicle emission tests could affect
11 million of its cars worldwide as investigations of its diesel
models multiplied, heaping fresh pressure on CEO Martin
Winterkorn.
Volkswagen has brought forward a meeting of senior
supervisory board members to Tuesday evening from Wednesday,
with Winterkorn's future on the line, a German newspaper
reported, citing board sources.
The report, in the Hannoversche Allgemeine Zeitung followed
an earlier story in the Tagesspiegel newspaper saying the board
would replace 68-year-old Winterkorn with Matthias Mueller, the
head of the automaker's Porsche sports car business.
A Volkswagen spokesman denied the Tagesspiegel report.
Winterkorn did not mention his future in a video message posted
on the company's website in which he repeated his apology for
the scandal.
But a key Winterkorn ally withheld public support for the
chief executive.
"I don't want to preempt the upcoming intense deliberations
and will not comment on details or any consequences," Stephan
Weil, head of the German state of Lower Saxony, told reporters
in Hanover when asked about Winterkorn's future.
Weil, a supervisory board member representing Volkswagen's
second-largest shareholder, earlier this year helped Winterkorn
fend off a challenge to his leadership by long-time chairman
Ferdinand Piech and earlier this month backed the CEO's contract
extension.
Shares in the world's biggest carmaker by sales plunged
almost 20 percent on Monday after it admitted using software
that deceived U.S. regulators measuring toxic emissions in some
of its diesel cars.
The stock tumbled another 20 percent to a four-year low on
Tuesday after some countries in Europe and Asia said they would
launch investigations themselves. Preference shares were down
19.7 percent at 106.1 euros at 1500 GMT.
At the lowest point, the declines in the preference and
ordinary shares wiped more than $30 billion off the company's
market value.
Volkswagen said it would set aside 6.5 billion euros ($7.3
billion) in its third-quarter accounts to help cover the costs
of the biggest scandal in its 78-year-history, blowing a hole in
analysts' profit forecasts.
It also warned that amount could rise, saying diesel cars
with so-called Type EA 189 engines built into about 11 million
Volkswagen models worldwide had shown a "noticeable deviation"
in emission levels between testing and road use.
The U.S. Environmental Protection Agency (EPA) said on
Friday Volkswagen could face penalties of up to $18 billion for
cheating emissions tests. The carmaker also faces lawsuits and
damage to its reputation that could hit sales, and media reports
have said the U.S. Department of Justice has opened a criminal
inquiry into the matter.
In addition, New York and other state attorneys general are
forming a group to probe the scandal, a spokesman for New York
Attorney General Eric Schneiderman said.
The probe would focus on potential violations of
environmental and consumer fraud laws, the spokesman said.
The crisis has also sent shockwaves through Germany, with
Chancellor Angela Merkel calling for "complete transparency"
from a company long seen as a symbol of the country's
engineering excellence.
Winterkorn was due to have his contract extended at a
supervisory board meeting on Friday but is now facing questions
over how the scandal came about.
Volkswagen, which for several years has been airing U.S. TV
commercials lauding its "clean diesel" cars, was challenged by
authorities as far back as 2014 over tests showing emissions
exceeded California state and U.S. federal limits.
The company attributed the excess emissions to "various
technical issues" and "unexpected" real-world conditions.
It was not until the EPA and the California Air Resources Board
threatened to withhold certification for its 2016 diesel models
that Volkswagen in early September admitted its wrongdoing.
"Winterkorn either knew of proceedings in the U.S. or it was
not reported to him," Evercore ISI analyst Arndt Ellinghorst
said. "In the first instance, he must step down immediately. In
the second, one needs to ask why such a far-reaching violation
was not reported to the top and then things will get tough too."
Porsche's Mueller was promoted to Volkswagen's executive
board on March 1 and was previously its head product strategist.
As a management board member of family-owned Porsche SE
, he is also close to the Porsche-Piech clan that has
a controlling stake in Volkswagen.
'TOTALLY SCREWED UP'
Winterkorn has built Volkswagen into one of the world's
top-selling brands since he took the helm in 2007, with brands
ranging from budget Seats and Skodas to premium Audis and
top-end Lamborghinis.
But he has also faced criticism for a centralised management
style which some analysts say has hampered the company's efforts
to address long-standing underperformance in North America.
Workers in Wolfsburg, where Volkswagen employs over 50,000
people, were dismayed by the damage to the company's image. "If
Winterkorn knew of the manipulation, then he must go," said one
staffer who works in human resources at the plant.
Late on Monday, Volkswagen's U.S. chief Michael Horn said
the company had "totally screwed up" and promised to make
amends.
There have been no suggestions so far that other carmakers
have engaged in the same practices as Volkswagen. Germany's BMW
and Daimler have said the accusations
against Volkswagen did not apply to them.
But shares in those companies as well as rivals including
Peugeot, Renault and Fiat Chrysler
fell on Tuesday amid signs regulators across the world will step
up scrutiny of vehicle tests, which environmentalists have long
criticised for exaggerating fuel-saving and emissions results.
The EPA said on Monday it would widen its investigation to
other automakers, and French Finance Minister Michel Sapin said
on Tuesday an EU-wide inquiry was needed too.
Germany's Transport Ministry said it would send an
investigative commission to study whether cars built at
Volkswagen's headquarters complied with German and European
emissions guidelines. Italy asked VW to prove the cars sold in
that country do not contain the "defeat devices" at the centre
of the scandal, while Switzerland also said it would investigate
Volkswagen's diesel vehicle emissions tests.
The European Commission said it was in contact with
Volkswagen and U.S. authorities, and it was premature to say
whether specific checks on the carmaker's vehicles were needed.
In Asia, South Korea's environment ministry said it would
investigate 4,000 to 5,000 of Volkswagen's Jetta, Golf and Audi
A3 vehicles produced in 2014 and 2015, and it could expand its
probe to all German diesel cars if it found problems.
(Additional reporting by European and Asian bureaus and by
Karen Freifeld in New York; Writing by Mark Potter and Christian
Plumb; Editing by Tom Brown and Cynthia Osterman