VW Emissiongate: 11 million diesel cars affected worldwide, heads will roll
Das PollutionEvery big scandal in the US needs a 'gate' suffix ever since Watergate, apparently, so let's skip right to it: Emissiongate is only just starting for Volkswagen, and pressure is mounting on the company's CEO, Martin Winterkorn. His reputation for attention to detail and, well, being a control freak is catching up to him. When things are going well, a lot of the credit goes to him as a hands on chief executive officer, but now that the roof is on fire, the buck appears to be stopping there too.
Bloomberg has a piece about just how involved Mr. Winterkorn was in all aspects of production and design at VW:
Visiting the Tennessee site before the 2011 opening, he berated staff for hanging chrome parts for air vents, doors and gear shifts on the wall. To check that they uniformly glistened before agreeing to use them in the sedan, he wanted them displayed on a table with light shining down at the same angle that customers would see the parts in the car.
Known to measure gaps between metal parts and laud the MontBlanc pen-like finish on plastic parts of the Golf hatchback, Winterkorn’s focus on details is legendary in the industry. With the world’s biggest carmaker facing a U.S. criminal probe for cheating on emissions tests, it’s now coming back to haunt him.
“I would be very much surprised if this was just a handful of engineers manipulating the software and everyone else not knowing about it,” said Arndt Ellinghorst, a London-based analyst with Evercore ISI who has followed VW for more than a decade. “For Martin Winterkorn, it is clear that if he knew about this, these allegations weigh so heavily that he must bear the consequences personally and resign.” (source)
While the initial recall in the U.S. was for about 500,000 VW vehicles, the company is now saying that there are 11 million diesel vehicles that are affected by the emission problem worldwide.
The company can no doubt expect phone calls and letter from regulators all over the world...
Wikimedia/CC BY-SA 3.0
Not surprisingly, the media is full of stories based on "sources in the know" that claim that VW's CEO will be out by the end of the week. Here's Reuters:
Volkswagen will dismiss Chief Executive Martin Winterkorn, a German newspaper said on Tuesday, after the carmaker admitted to cheating U.S. vehicles emissions tests and said 11 million of its cars could be affected worldwide.
The Tagesspiegel newspaper, citing unidentified sources on Volkswagen's supervisory board, said Winterkorn would be replaced by Matthias Mueller, the head of the carmaker's Porsche sports car business.
But some executives losing their jobs isn't the only problem for VW: The U.S. Justice Department has opened a criminal probe, and I wouldn't be surprised if they found enough evidence to press charges. If they have the software that was explicitly designed to cheat, and that software was approved by higher ups, there's your intent.
Meanwhile, the plunge in the company stock that started yesterday is continuing today. Currently the ticker reads -18.81%, with a 5-day drop of almost 35%:
Google Finance/Screen capture
But let's keep our eye on the ball. The media will no doubt make this all about how much money VW is losing, or the dishonesty... But the real bottom line is that millions and millions of people around the world have been exposed to harmful pollutants that they shouldn't have been exposed to, especially in urban areas where the density of vehicles affects air quality significantly. VW owes an apology to those people, whether they've just had an asthma attack or will get lung cancer (you can never prove that it was because of this, of course, but it certainly doesn't help).