The CEO of Volkswagen says he is "endlessly sorry" for the ongoing emissions scandal that has now widened to include 11 million cars, but pushed back at calls for his ouster by saying he is committed to getting to the bottom of the mess.
Martin Winterkorn made the statement in a video message after the automaker admitted that some 11 million cars worldwide had been affixed with software designed to ace emissions tests when in reality the cars had nowhere near the same readings under normal use. In some cases, the vehicles would be emitting as much as 40 times the allowable pollution limit, despite having passed official emissions tests with flying colours.
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"Millions of people across the world trust our brands, our cars and our technologies," Winterkorn said Tuesday in a video message. "I am endlessly sorry that we have disappointed this trust. I apologize in every way to our customers, to authorities and the whole public for the wrongdoing."
"We are asking, I am asking for your trust on our way forward," he said. "We will clear this up."
In making the statement, he rebuffed calls for his resignation. German magazine Der Tagesspiel reported earlier on Tuesday that Winterkorn was set to be fired and replaced by Porsche CEO Matthias Mueller.
'It is in Volkswagen's best interest to publicly address steps to fix this mess as soon as possible before it loses its customer base for good.' - Jessica Caldwell, Edmunds.com
Before the scandal broke over the weekend, Winterkorn was set to be rubber-stamped for a new two-year contract as Volkswagen's CEO on Friday. He has led the automaker since 2007 after winning a power struggle with longtime board chairman Ferdinand Piech, who resigned in April.
The German automaker said it will set aside 6.5 billion euros ($9.6 billion Cdn) in its current quarter to deal with repairs and other service issues related to the recall of 11 million vehicles worldwide.
The company's Canadian arm says five diesel models are affected, including:
- The VW Jetta — model years 2009-15.
- The VW Golf — from 2010-15.
- The VW Beetle — from 2013-15.
- The VW Passat — from 2012-15.
- The VW Golf Wagon/Sportwagon — from 2009-15.
About 25 per cent of Volkswagen's vehicles worldwide are affected, but the figure is more than all the cars that Volkswagen sold last year. At least two class action lawsuits have been launched in the U.S. seeking punitive damages on behalf of former drivers and buyers.
The $9.6-billion figure cited by the company is merely for the actual repair work, and doesn't include any fines or legal costs. The EPA has indicated that it could, in theory, fine VW up to $18 billion.
On Tuesday, Environment Canada said it had begun an investigation into use of a "defeat device" to get around emissions testing rules to determine if there had been a violation of Canadian law.
Approximately 100,000 Volkswagen and Audi four-cylinder diesel cars of the model years 2009-2015 were sold in Canada, it said.
Many have suggested the true cost will end up being much, much more. "I don't think this is a life-threatening event, but it's clear it's going to be very expensive," said Christian Stadler, professor of strategic management at Warwick Business School.
Stock price hammered
The damage has spilled over into the company's stock price, which has shed more than a third of its value since Monday morning. And now other automakers are being swept up in the story over fears their emission claims aren't all they claim to be either.
Germany's Daimler AG, the maker of Mercedes-Benz cars, was down six per cent, while BMW AG fell 5.3 per cent. France's Renault SA was 5.5 per cent lower on Tuesday.
The impact on consumers is muted for the time being. Unlike other car recall scandals, there is no allegation of any sort of safety defect in play here.
"The good news for these owners is that there is no imminent safety threat in driving these vehicles," said Jessica Caldwell, a director at car selling website Edmunds.com.
"Owners who bought these diesel vehicles in part because of any environmental benefits may have moral objections to driving them, and they may feel they have no other option but to keep their cars parked for the time being," but panic selling would likely be a mistake, the website says.
Despite any immediate safety concerns, it's clear that one of the world's most popular car companies has a growing problem on its hands.
"It is in Volkswagen's best interest to publicly address steps to fix this mess as soon as possible before it loses its customer base for good," Caldwell said.