The first of probably many shoes to drop from the big Volkswagen scandal is their CEO Martin Winterkorn even though Winterkorn promised a thorough and transparent investigation regarding emissions cheating.
Volkswagen admitted that to bypass tigheter emissions standards in the United States, that it installed software on some of its makes and models to lower engine performance during testing situations, which helped it pass emissions tests.
The debacle could cost billions of dollars in Volkswagen reputation and expected fines, and doesn’t even scratch the surface of the coverup. Volkswagen refused to answer questions from California’s Air Resources Board, and the Federal Environmental Protection Agency when they were asked to explain how their cars had only a fraction of the emissions in testing versus in real-world driving.
In his resignation letter, Mr. Winterkorn stated that he was “shocked by the events of the past few days” when commenting on the scandal that effects about 25% of VW’s sales in the United States. With upcoming probes and possible criminal investigations, the car maker has gotten itself in a major jam.
Volkswagen stock closed today at $111.50 per share and has lost about 40% of its value since five days ago when the stock was trading around $168 per share. If you’re a contrarian, this may be a good opportunity to nibble down here.
While the word Volkswagen means “People’s Car” in German, I don’t see many folks rushing the gates to go out and get one in the near term.