FRANKFURT, Germany — Volkswagen searched Thursday for a new chief to steer it out of a global pollution cheating storm, as suspicions over diesel car emissions spread for the first time to fellow German manufacturer BMW.
Shares in BMW skidded nearly 10% after Auto Bild reported that emissions from one of its diesel models were 11 times higher than European Union norms. But BMW said it had not cheated in pollution tests, as VW has admitted to doing.
“The BMW group does not manipulate or rig any emissions tests. We observe the legal requirements in each country and adhere to all local testing requirements,” it said in a statement. “We are not familiar with the test mentioned by Auto Bild concerning the emissions of a BMW X3 during a road test. No specific details of the test have yet been provided and therefore we cannot explain these results.”
The test on BMW’s X3 xDrive was carried out by the International Council on Clean Transportation, which had been at the origin of revelations of emissions cheating by Volkswagen.
After initially plunging 9.7% on the report, BMW shares were showing a loss of 6.8% by mid-afternoon.
Germany’s powerful car industry has been reeling over the revelations that Volkswagen fitted up to 11 million of its diesel cars with devices capable of fooling emissions tests.
The scandal, which emerged last Friday when U.S. officials publicly accused the company of cheating and launched a probe, has now gone global with French and South Korean authorities also announcing investigations.
An Investor Boycott
The biggest bank in the Nordic region, Nordea, said it was barring its traders from buying Volkswagen shares and bonds for six months over the emissions scandal.
“We are sending a clear message that this is unacceptable,” Sasja Beslik, head of responsible investments at Stockholm-based Nordea, said. “We believe this action, or lack of action, from the management is outrageous. It’s poor judgement in terms of business, but it’s also very costly from a financial point of view.”
Investors had dumped Volkswagen shares on Monday and Tuesday, sending it into 35% meltdown and wiping 25 billion euros ($28 billion) off the company’s market.
On Wednesday, VW CEO Martin Winterkorn resigned, saying he was “stunned that misconduct on such a scale was possible in the Volkswagen group” and that he accepted responsibility as chief executive for the manipulation of diesel emission tests. The 68-year-old said he was “not aware of any wrong doing” on his part.
“Volkswagen needs a fresh start — also in terms of personnel. I am clearing the way for this fresh start with my resignation.”
The resignation appeared initially to turn the tide for Volkswagen on the market, with its shares shooting up 7.9% to hit an intraday high of 120.30 euros in the morning in Frankfurt, although they later showed gains of just 1.8% by mid-afternoon.
Possible Successors at the Top
As questions grow over how Volkswagen might have carried out such a large-scale scam, the world’s biggest auto manufacturer by sales is seeking a CEO to steer it through the difficult terrain ahead.
Rumors of potential successors circulated widely in German media, but it seems likely the new boss will come from one of the sprawling family of brands that make up the group.
The Volkswagen group owns brands such as SEAT in Spain, Skoda in the Czech Republic, Audi and Porsche in Germany, Lamborghini in Italy and Bentley in Britain — and three men appear to have emerged as candidates.
Matthias Mueller, the 62-year-old head of the luxury sports car maker Porsche, had already been tipped to replace Winterkorn during the latter’s bitter feud this year with Ferdinand Piech his one-time mentor and former supervisory board chief.
Herbert Diess, 56, a defector from rival BMW who is currently head of the VW brand and has a reputation as a cost-killer, has also been mentioned as possible candidate.
Rupert Stadler, the 52-year-old head of VW’s luxury brand Audi, is also said to be in the running.
The supervisory board is scheduled to meet on Friday to find a new CEO charged with restoring the group’s reputation and handling mounting worldwide legal action over the pollution scandal.
In addition to investigations from France to South Korea, public prosecutors in Germany said they were examining information and evaluating legal suits already filed against the company by a number of private individuals to decide whether to launch a full criminal inquiry against those responsible.
Threat of a Downgrade
According to the U.S. authorities, VW has admitted that it equipped about 482,000 cars in the United States with sophisticated software that covertly turns off pollution controls when the car is being driven. It turns them on only when it detects that the vehicle is undergoing an emissions test.
With the so-called “defeat device” deactivated, the car can spew pollutant gases into the air, including nitrogen oxide, in amounts as much as 40 times higher than emissions standards, according to the Environmental Protection Agency.
The EPA is conducting an investigation that could lead to fines amounting to a maximum of more than $18 billion. The Department of Justice has also launched a criminal inquiry. Standard & Poor’s warned it may cut Volkswagen’s credit rating over the pollution cheating scandal, as fellow rating agency Fitch did on Wednesday.
In addition, private law firms are lining up to take on the German company, with a class action suit already filed by a Seattle law firm.
Volkswagen has set aside 6.5 billion euros in provisions for the third quarter to cover the potential costs of the revelations.
Volkswagen SEAT unit fitted over 500,000 cars it manufactured with the pollution control defeat device, Spanish newspaper El Pais reported Thursday.
Copyright Agence France-Presse, 2015