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Martin Winterkorn, CEO of Volkswagen, participates in a news conference at New York's Museum of Modern Art.
AP Photo/Richard Drew
Oh dear.
OFF THE SKIDS

Today it cost Volkswagen $17 billion to say “sorry”

Jason Karaian
By Jason Karaian

Global finance and economics editor

For Volkswagen, apologies don’t come cheap. Yesterday (Sept. 20), the German car giant’s CEO, Martin Winterkorn, issued a statement in response to a burgeoning scandal over software installed in cars to cheat on US emissions tests.

“I personally am deeply sorry that we have broken the trust of our customers and the public,” Winterkorn said.

By the book, Volkswagen faces a fine of up to $18 billion, although most expect it to negotiate a smaller penalty. Investors aren’t keen to wait around, though—Volkswagen’s shares have plunged by 20% in Frankfurt trading today.

The fall destroyed more than €15 billion ($17 billion) in value of the (now) €61-billion market cap automaker.

Late last week, the company was ordered by the US Environmental Protection Agency to recall some 482,000 diesel vehicles with “defeat device” software installed in models between 2009 and 2015. The company will also stop selling certain Audi and Volkswagen vehicles with diesel engines in the US.

The possible fine and recalls are not the only things spooking the markets. Criminal prosecution, private class-action lawsuits, and forgone sales due to hostile regulation from angry American officials will loom over the company for some time to come.

And having just been through a bruising boardroom battle that saw Winterkorn oust longtime VW chairman Ferdinand Piëch, the company could be in for more management upheaval. With spectacularly bad timing for the CEO, Winterkorn’s contract renewal is up for a vote by the board at the end of this week.

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