VW shares plunge as emissions cheating threatens U.S. sales

Volkswagen Chief Executive Martin Winterkorn, pictured here in in May, said in a statement Sunday that he was "deeply sorry" that the company had "broken the trust of our customers and the public."

Volkswagen Chief Executive Martin Winterkorn, pictured here in in May, said in a statement Sunday that he was “deeply sorry” that the company had “broken the trust of our customers and the public.”

(Frank Augstein / Associated Press)
Share via

Volkswagen shares tumbled almost 20% Monday, a day after the company’s chief executive apologized for having “broken the trust” of its customers for evading U.S. emissions regulations.

On Friday, federal and state regulators said the German automaker used software in 482,000 of its diesel vehicles since 2009 to cheat on U.S. emissions tests. VW will have to recall all of the vehicles and modify the emissions system at its own expense, regulators said. It could also face a fine of up to $18 billion, according to federal environmental officials.

Volkswagen shares fell $33.89, or 18.5%, to close at $149.68 Monday.

In a statement Sunday, VW Chief Executive Martin Winterkorn said the company is taking the findings “very seriously.”


“I personally am deeply sorry that we have broken the trust of our customers and the public,” he said. “We will cooperate fully with the responsible agencies, with transparency and urgency, to clearly, openly and completely establish all of the facts of this case.”

He said VW has also ordered an external investigation into the matter.

“The trust of our customers and the public is and continues to be our most important asset,” Winterkorn said. “We at Volkswagen will do everything that must be done in order to re-establish the trust that so many people have placed in us, and we will do everything necessary in order to reverse the damage this has caused.”

The scandal jeopordizes what consulting firm BMI Research said is VW’s “precarious position” in the U.S., a key part of its strategy to grow sales and solidify its position in the world’s largest car market.

VW is the dominant diesel brand in the U.S. and the emissions cheating scheme “threatens one of the few advantages the German company has in the country,” BMI said.

The automaker, including its upscale Audi and Porsche brands, accounts for only about 3.5% of U.S. auto sales. VW brand sales have fallen 2.8% through the first eight months of this year to just 238,074 vehicles, fewer than Subaru and Kia, according to Autodata Corp.

SIGN UP for the free California Inc. business newsletter >>


Other analysts share BMI’s view.

The regulatory evasion “could seriously undermine the group’s brand image, particularly in the U.S., where Volkswagen is already struggling to increase its market share,” said Emmanuel Bulle, an analyst at Fitch Ratings, the corporate credit rating firm.

Fallout from the scandal could have wide-ranging consequences that extend beyond VW’s U.S. operations, Bulle said.

“We believe that this high-profile event could set a precedent for a bolder U.S. environmental stance on vehicle emissions,” he said.

It also could prompt other regions to review Volkswagen’s vehicles and whether the investigation will have any impact on future test regimes in Europe and other markets, he said.

Bulle said it is unlikely the Environmental Protection Agency will fine Volkswagen the theoretical maximum amount of $7,500 per car, or $18 billion, “although there have been only very few precedents of such cases and associated fines.”

The affected diesel models include: Jetta (model years 2009-15), Beetle (model years 2009-15), Audi A3 (model years 2009-15), Golf (model years 2009-15), and Passat (model years 2012-15).


The automaker suspended sales of the 2015 models.

UPDATED 3:59 p.m.: This post originally misstated VW’s stock price, citing euros as dollars.


VW’s ‘ugly’ emissions cheating scandal will damage diesel technology

Wal-Mart test truck aims to slash fuel consumption on big rigs

New prescription drugs can help patients, but their high prices elicit ire