What's next?After meeting with big Volkswagen shareholders and union leaders, VW's CEO Martin Winterkorn has offered his resignation to the company's board of directors:
“Volkswagen needs a fresh start—also in terms of personnel,” Mr. Winterkorn said. “I am clearing the way for this fresh start with my resignation.”
Mr. Winterkorn said that he accepted responsibility for the irregularities found in diesel engines and has asked the supervisory board to agree to his stepping down. He said, however, that he wasn't aware of any wrongdoing on his part.
Just yesterday, VW said it would take a €6.5 billion ($7.27 billion) charge to earnings, cut its full-year sales forecast, and said as many as 11 million vehicles world-wide could be affected. Based on some back-of-the-napkin math which we shared with you yesterday, these 11 million vehicles could be adding about 1 million tons of extra pollution to the atmosphere every year.
Let's hope other environmental fraudsters are looking at the fate of VW and its executives and reconsidering their choices... And the party is just getting started. There are no doubt many other countries that will join the U.S. in asking for recalls and fines, and criminal charges are likely to be coming from many jurisdiction too (it's hard to claim that the rigged software was written by accident and that there was no intent to commit a crime).
This comes at a time when VW was finally neck-and-neck, and starting to surpass Toyota in global sales. It looks like the company won't be the biggest automaker in the world for very long if this hit to the company's reputation impacts sales the way that I think it will...
Now the most important thing is to use this moment in time productively. There's a big spotlight shinning not only on VW, but on the whole industry. It's a great opportunity to find other issues - whether they are voluntary fraud or just undiscovered errors - and to tighten rules so that this won't happen in the future. I think enforcement of emission testing should be made tougher and harder to circumvent. And while everybody's thinking about air quality, now would probably also be a good time to push forward some initiatives that would lead to cleaner air (tighter standards on vehicle emissions, including trucks and large cargo ships, more investment in mass transit, bike infrastructure, planting trees in urban areas, plug-in vehicles, etc).