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Volkswagen shares drops 15% after admitting cheating on US diesel emissions tests for years

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Volkswagen's supervisory board will pick the head of sports-car maker Porsche as its next chief executive to succeed Martin Winterkorn who resigned on Wednesday, a source familiar with the matter told Reuters.

[BERLIN] Volkswagen shares dropped 15 per cent when trading opened on Monday (Sept 21), the most in almost six years, after it admitted to cheating on US air pollution tests for years.

The German carmaker admitted to fitting its US diesel vehicles with software that turns on full pollution controls only when the car is undergoing official emissions testing, the Environmental Protection Agency said Friday.

The violations, which affect nearly half a million vehicles, could result in as much as US$18 billion (S$25.29 billion) in fines. Criminal prosecution is also possible.

The shares declined as much as 23.80 euros and were down 14 per cent at 140 euros as of 9:03 am in Frankfurt. The drop extends the fall for the year to 24 per cent, valuing the company at 66.2 billion euros (S$105.2 billion).

Volkswagen chief executive officer Martin Winterkorn said on Sunday that the company is cooperating with regulatory investigators and ordered its own external investigation into the issue. The CEO said he was "deeply sorry" for breaking the public's trust.

During normal driving, the cars with the software - known as a "defeat device" - would pollute 10 times to 40 times the legal limits, the EPA estimated. The discrepancy emerged after the International Council on Clean Transportation commissioned real-world emissions tests of diesel vehicles including a Jetta and Passat, then compared them to lab results.

Volkswagen had counted on clean, powerful diesel cars to help it build its sales in the US, where it has struggled for years. Sales of VW-brand cars in the country dropped 10 per cent last year to 366,970.

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