BERLIN: Volkswagen chief executive Martin Winterkorn resigned today, taking responsibility for the German carmaker's rigging of US emissions tests in the biggest scandal in its 78-year history.
"Volkswagen needs a fresh start - also in terms of personnel. I am clearing the way for this fresh start with my resignation," Winterkorn said, following a marathon meeting with the executive committee of the VW board.
The world's biggest carmaker has admitted to US regulators that it programmed computers in its cars to detect when they were being tested and alter the running of their diesel engines to conceal their true emissions.
Volkswagen did not name a successor, but said proposals on management appointments would be made to a full board meeting on Friday. Tagesspiegel newspaper, citing sources close to the board, said earlier that Winterkorn would be replaced by Matthias Mueller, who heads the company's Porsche sports car business.
WATCH WINTERKORN VIDEO ON DIESEL SCANDAL PRIOR TO RESIGNATION
(Posted on YouTube Sept 22, 2015)
Mueller, a former head product strategist, is also a management board member of Porsche SE, and so close to the Piech-Porsche family that controls Volkswagen.
Winterkorn, who during his eight years in charge oversaw a doubling in Volkswagen's sales and an almost tripling in profit, said he was shocked that misconduct on such a massive scale had been possible at the company, adding that he was not aware of any wrongdoing on his own part.
The carmaker was under huge pressure to take decisive action, with its shares down more than 30 percent in value since the crisis broke.
German Chancellor Angela Merkel had urged Volkswagen to move "as quickly as possible" to restore confidence in a company held up for generations as a paragon of German engineering prowess.
The US Environmental Protection Agency (EPA) said on Friday Volkswagen could face penalties of up to US$18 billion.
Mueller is a potential successor.
Since then the crisis has snowballed, with the US Justice Department launching a criminal inquiry, according to a source familiar with the matter. European and Asian countries have also said they are investigating the matter.
Senior members of Volkswagen's board said in a statement they expected more heads to roll as an internal investigation seeks to identify who was responsible for the wrongdoing.
Volkswagen said on Tuesday about 11 million of its cars were fitted with Type EA 189 engines that had shown a "noticeable deviation" in emission levels between testing and road use.
The company sold 10.1 million cars in the whole of 2014.
The story has shocked the car market, with dealers in the United States reporting people holding back from buying diesel cars and "#dieselgate" trending on Twitter.
"Winterkorn did a good job and does not deserve to be sacrificed," said Metzler analyst Juergen Pieper.
"But given the scale of the problem and that he was responsible for R&D, one has to swallow the pill if something goes wrong," he said, adding that the heads of the company's Audi brand Rupert Stadler and VW brand Herbert Diess were possible successors, along with Porsche's Mueller.
Diesel engines power less than 3 percent of new cars sold in the United States but around half of cars in Europe, where governments have encouraged their use to meet fuel efficiency and greenhouse gas targets.
Their biggest selling point is fuel economy and low carbon emissions compared with standard gasoline engines. But they emit far more nitrogen dioxide, a toxic gas blamed for health problems. The suggestion that their emissions are worse than reported in tests could harm the whole sector and alter the future of the car industry worldwide.
"The Volkswagen issue is another black eye for the diesel engine overall," Mike Jackson, the chief executive of the AutoNation, the largest US car retailer, told CNBC, adding the "brand position" of Volkswagen was at risk in the US market.
