Martin Winterkorn is out at Volkswagen.
Just one day removed from a video statement in which he apologized for thethat has rocked VW in the last week, Winterkorn, CEO of the world's largest automaker, has stepped down.
Last Friday, the US Environmental Protection Agency charged that the Volkswagen Group had deliberately fitted nearly half-a-million US diesel vehicles with software designed to circumvent federal air pollution controls. The programming end-run allows vehicles to pass the EPA's test cycle procedures but spew up to 40 times the emissions in real-world use.
The news shocked the auto industry and the world's financial markets, sending Volkswagen's stock into freefall, losing some 35 percent of its value over two days. Subsequently, it was revealed that the cheater software is installed in 11 million cars globally, a revelation that prompted VW to reserve $7.3 billion in funds on Tuesday to cover costs relating to the crisis.
The 68-year-old Winterkorn has been at the helm of Volkswagen for almost a decade, where he cultured a reputation for wielding absolute authority through a combination of ruthlessly savvy boardroom dealings and a legendary attention to detail -- the latter of which may have turned out to haunt him in light of this scandal. Despite -- or because of -- his hardline management style, VW grew mightily under his leadership, becoming the largest automaker in the world by volume of cars produced.
In a statement released on his departure, Winterkorn said that as CEO, he accepts responsibility for the "irregularities" that have been discovered. "I am doing this in the interests of the company even though I am not aware of any wrongdoing on my part," he said. "Volkswagen needs a fresh start -- also in terms of personnel. I am clearing the way for this fresh start with my resignation."
While Winterkorn's exit is an important development in VW's efforts to deal with this diesel emissions catastrophe, it is likely the first of many difficult steps. Not only is the Wolfsburg, Germany, automaker facing $18 billion in potential fines from the US government alone, at least one lawsuit has been filed on behalf of angry VW owners who feel duped and are looking to head off drops in resale value. What's more, all new VW diesel models in US showrooms, and the company will have to recall the affected models once a fix can be developed.
Additionally, other countries where VW diesels have been sold are launching their own investigations, and further penalties, recalls and criminal charges are possible.
The Volkswagen supervisory board is scheduled to convene Friday, at which point it is expected to decide who will succeed Winterkorn. Porsche CEO Matthias Müller is rumored to be a top consideration.