Volkswagen Emissions Scandal Update: CEO Winterkorn Resigns

We reported earlier this week Volkswagen is in the midst of a large-scale scandal involving cheating U.S. emissions using a software trick. In the midst of this situation, the Volkswagen AG CEO, Martin Winterkorn, is stepping down. A meeting this Friday will determine Winterkorn’s successor at VW.

Martin Winterkorn, CEO of Volkswagen AG has decided to resign, effective immediately. In a statement released by VW, Winterkorn said, “As CEO I accept responsibility for the irregularities that have been found in diesel engines and have therefore requested the Supervisory Board to agree on terminating my function as CEO of the Volkswagen Group.” Winterkorn’s resignation comes just a number of days after the discovery his organization skirted U.S. emissions laws on purpose using a software trick. The EPA discovered the software issue, who in turn told VW that they were incompliant with the clean air act. The EPA could fine Volkswagen upward of $18 billion. For the time being VW has also asked U.S. dealers to pull sales of the following vehicles:

• 2009–2015 Audi A3 2.0L TDI
• 2009–2015 VW Beetle 2.0L TDI
• 2009–2015 VW Golf 2.0L TDI
• 2009–2015 VW Jetta 2.0L TDI
• 2012–2015 VW Passat 2.0L TDI

It has been further admitted by VW that 11 million vehicles worldwide could have the software “defeat device” installed. Government authorities across the world could also hurl fines at VW. Class action lawsuits against the automaker are also starting to build. A count by Automotive News found 25 class-action lawsuits against VW since September 18.

Sales of VW vehicles in the U.S. were down 8.1 percent year over year this past August and for some vehicles, those numbers are about to come to a screeching halt. With three months and change left for selling in 2015, what impact will dealers feel from this Volkswagen emissions scandal?

With dealers unable to sell six years worth of popular vehicles, it could hit their bottom line very hard, except Volkswagen is trying help out. As reported by Road & Track, VW is offering compensation to dealers for vehicles they cannot sell. In the R&T report it indicates VW dealers will receive, “a guaranteed payout worth 1 percent of MSRP of each vehicle sold in the third and fourth quarters of this year, plus $300 per car ($600 per Passat) during the month of September. “VW will also reimburse dealers for new and pre-owned diesel vehicles subject to the stop sell order.”

While that money coming to VW dealers will help them out, what about the damage to the brand? What impact will this scandal have on consumer trust of VW moving forward? Will Volkswagen quickly patch the software? Will dealers be able to move the TDIs once again, or could this issue spell long-term problems for both dealers who sell new VWs and Audis as well as those who accept them as trade-ins?