Volkswagen Diesel Scandal: Update

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The Volkswagen Diesel "cheat" scandal continues to unfold but it is becoming increasingly difficult to distinguish between fact and rumour. What is very clear, however, is that the repercussions for Volkswagen are far reaching and severe.

Since publishing our first update two days ago, the following has happened or is strongly rumoured to be in development.

The CEO has resigned

Volkswagen CEO Martin Winterkorn has resigned, but has stated that he does not know of any wrongdoing on his part.

Porsche boss likely to take over

Matthias Mueller (62) who currently heads up Porsche (a VW Group company) is likely to be appointed the new CEO of Volkswagen on Friday 25/09/2015. Mueller is backed by the Piech/Porsche family which controls a majority stake in Volkswagen. Ferdinand Piech, the legendary former head of the supervisory board of Volkswagen AG, who was ousted in a boardroom battle with Winterkorn earlier this year, had put forward Mueller as his preferred successor back then, instead of Winterkorn.

More heads to roll

A string of very senior Volkswagen employees will find themselves unemployed shortly, either by choice or through being given their marching orders. At a supervisory board meeting on Wednesday it was announced that any executive found to be involved in the scandal “will be subject to the full consequences.”

Reports by the Bild newspaper suggest that Audi R&D boss Ullrich Hackenberg and Porsche engine chief Wolfgang Hatz will be dismissed today. Bild didn’t name its sources. The current Volkswagen U.S. Chief Executive, Michael Horn, would also be fired, according to Reuters. Earlier this week Horn was quoted as saying “we totally screwed up,” at the launch of the 2016 Passat, when referring to the diesel scandal. Horn, however, has the backing of his dealer council according to latest reports.

Market over-reaction?

BMW’s shares fell by nearly 10 % after German magazine Autobild reported on Thursday that a diesel version of the company’s X3 emitted as much as 11 times the European limit for air pollution in a test. The share price drop came without there being any evidence of wrongdoing on BMW's part, illustrating the market sensitivity to rumours and speculation. BMW has been quick to deny any wrongdoing.

The X3 was tested by the ICCT (International Council on Clean Transportation), that same organisation whose tipoff led US regulators to further investigate a gap in emissions between Volkswagen diesel cars (Jetta and Passat) in laboratory tests and in the real world.

And in South Africa?

As we reported in initial piece on this scandal, investigations in other countries, including South Korea, Australia, the United Kingdom and South Africa will get underway soon.

It is reported in the Cape Argus today that the Regulator for Compulsory Specifications (NRCS) and the departments of Environmental Affairs and Transport would investigate the matter in South Africa to determine whether South African vehicles are affected. A recall is not out of the question, should irregularities be found. The NRCS has however confirmed that all VW products have gone through the local homologation process and were found to be compliant.

We shall keep you posted if there are any further updates.

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