Will Volkswagen CEO Martin Winterkorn Lose His Job?

Someone will have to fall on his sword due to the extraordinary recall of diesel-powered cars in the United States, which some experts expect will cost Volkswagen as much as $18 billion. Although it may be someone in senior management who was aware of the cheating, Volkswagen CEO Martin Winterkorn, on whose watch the cars were built, may well be the victim chosen by the board.

VW shares dropped over 20% in the first day of trading after the problem was disclosed.

Winterkorn issued an apology for the 480,000-car recall and said VW has to gain back consumer trust. He did not, however, take responsibility for the disaster:

The U.S. Environmental Protection Agency and the California Air Resources Board (EPA and CARB) revealed their findings that while testing diesel cars of the Volkswagen Group they have detected manipulations that violate American environmental standards.

The Board of Management at Volkswagen AG takes these findings very seriously. I personally am deeply sorry that we have broken the trust of our customers and the public. 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. Volkswagen has ordered an external investigation of this matter.

We do not and will not tolerate violations of any kind of our internal rules or of the law.

The trust of our customers and the public is and continues to be our most important asset. 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. This matter has first priority for me, personally, and for our entire Board of Management.

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Michael Horn, the CEO of Volkswagen Group of America, cannot be blamed, even though the problem happened in the United States. He has little or nothing to do with the production of VW products. The recall could cost a very senior head of engineering or product development his or her job. With a scheme as elaborate and far-reaching as the diesel engine violations, it is impossible that anyone was solely responsible, so the punishment will be shouldered by a group.

The reason for the cheating, and those who cheated, will come out in VW’s internal investigation, as well as one that certainly will be done by the U.S. government. But the events occurred on Winterkorn’s watch, which could be enough to cost him his job. The board may need to do something as drastic as pushing him out to show that VW takes the disaster very seriously.