Expect more heads to roll at VW after CEO’s exit, says board member

BERLIN—A member of Volkswagen’s supervisory board says he expects further resignations at the German automaker in the wake of the scandal over rigged U.S. emissions tests.

Olaf Lies, economy and transport minister of VW’s home state Lower-Saxony, which holds a 20 per cent stake in the company, said the investigation into the scandal was only just starting.

He told news outlet rbb-Inforadio that “there must be people responsible for allowing the manipulation of emission levels to happen.”

Lies spoke a day after Volkswagen CEO Martin Winterkorn resigned, saying he took responsibility for the “irregularities” found by U.S. inspectors in VW’s diesel engines while insisting he’d personally done nothing wrong.

Volkswagen CEO Martin Winterkorn resigned Wednesday, days after admitting that the world’s top-selling carmaker had rigged diesel emissions to pass U.S. tests during his tenure.

Winterkorn took responsibility for the “irregularities” found by U.S. inspectors in VW’s diesel engines, but insisted he had personally done nothing wrong.

“I am doing this in the interests of the company even though I am not aware of any wrongdoing on my part,” his statement said. “Volkswagen needs a fresh start … I am clearing the way for this fresh start with my resignation.”

Winterkorn, 68, resigned following a crisis meeting of the Volkswagen supervisory board’s executive committee. Its acting chairman, Berthold Huber, said company directors are “resolved to embark with determination on a credible new beginning.”

No replacement was announced, and VW still has no easy exit from a scandal that has suddenly dented a reputation for trustworthiness that took decades to build. The smog-test trickery has wiped out billions in VW’s market value and raised the spectre of criminal investigations and billions more in fines.

Huber said a successor will be discussed at a board meeting on Friday that was originally intended to approve extending Winterkorn’s contract through 2018.

VW has reversed its market slide, closing up 6.9 per cent at 118.90 euros. But VW’s share price has a long way to go to recoup it’s losses.

Nearly 25 billion euros (around $28 billion) was wiped out in the first two days of trading after the U.S. Environmental Protection Agency revealed that VW has been violating the Clean Air Act and could be subject to fines of as much as $18 billion.

Winterkorn, VW’s boss since 2007, had come under intense pressure since the EPA’s disclosure Friday that stealth software makes VW’s 2009-2015 model cars powered by 2.0-litre diesel engines run cleaner during emissions tests than in actual driving.

The EPA accused VW of installing the so-called “defeat device” in 482,000 cars sold in the U.S. VW later acknowledged that similar software exists in 11 million diesel cars worldwide and was setting aside 6.5 billion euros to cover the costs of the scandal.

Huber said “Mr. Winterkorn had no knowledge of the manipulation of emission values,” and praised the departing CEO’s “readiness to take responsibility in this difficult situation for Volkswagen.”

The prosecutors’ office in Braunschweig, near VW’s Wolfsburg headquarters, confirmed that it is weighing an investigation of VW employees.

Other governments from Europe to South Korea have begun their own inquiries, and law firms have already filed class-action suits on behalf of customers.ins unclear, VW is “one of Germany’s most important global champions” and an “important growth driver for the German economy.”

Another unanswered question is whether Volkswagen was alone in trying to dupe emissions testers. Wah okorries about wider malpractices have depressed the share prices of many other European automakers, though not on VW’s scale.

Some of those stocks recovered slightly from early session losses Wednesday. BMW’s closed up 0.6 per cent, while Daimler’s was up 0.3 per cent. French carmakers Peugeot Citroen and Renault fared worse though, down 2.6 per cent and 2.3 per cent respectively.

“Dealers despise being kept in the dark, and the carmakers as a whole will be a sector to swerve until there is a conclusion to this saga,” said David Madden, a market analyst at IG.

Germany’s biggest bank, Deutsche Bank, has already lowered its forecast for the main German stock market index, the DAX, where carmakers account for 25 per cent of its total value. It warned clients to expect “a potentially more sustained loss in brand value and prolonged recovery period ahead in the U.S.”