Sept. 23--The Volkswagen emissions cheating investigation has claimed the chief executive's job in less than a week, another sign that the exploding scandal could eclipse even the troubles of automakers enmeshed in crackdowns on safety defects.
Volkswagen Chief Executive Martin Winterkorn quit on Wednesday, saying he was " not aware" of any wrongdoing on his part, but "stunned that misconduct on such a scale was possible in the Volkswagen Group."
The wrongdoing stands out from other auto scandals for its boldness -- years of cheating and lying to hide pollution from diesel cars -- and for clarity of the company's guilt, from the moment the investigation became public on Friday.
Once the billion-dollar fines and lawsuits and recall expenses are tallied, it may also eclipse other scandals in its damage to the brand and its bottom line, said Jack R. Nerad, executive editorial director and executive market analyst for Kelley Blue Book.
"The Volkswagen scandal has escalated far beyond the realm of recent safety recall issues that have affected other companies," he said. "With VW's market capitalization down by a third and rumors of criminal investigations popping up on at least two continents ... The VW Board obviously feels compelled to do some quick triage to stem the bleeding."
Mary Barra of General Motors, by contrast, weathered the investigation into defective ignition switches with frequent apologies, a few firings and repeated pledges to inject accountability into GM's bureaucratic culture. Akio Toyoda, at Toyota Motor Co., navigated that company's record recalls and fines related to a cover-up of alleged, unintended acceleration incidents.
But the storm now facing VW and Winkerkorn demanded a swift change at the top, analysts said.
Neither regulators nor Volkswagen have yet named those who designed, installed and approved the cheating software, but Winterkorn's resignation marks the first casualty -- and likely not the last.
"What Volkswagen did was heinous -- borderline criminal, and certainly immoral -- and someone has to pay for that," said Howard Bragman, founder and chairman of the PR company Fifteen Minutes. "The CEO was left with no choice but to resign."
Bragman -- who grew up in Flint, Mich., in the shadow of car giant General Motors -- said anything less than the chief executive's resignation would not have been appropriate or effective in addressing the scandal.
"The level of person that has to leave is directly proportional to the egregiousness of the act," Bragman said.
The fact that the deception had gone on for years -- dating to 2009 model cars -- suggests either that Winterkorn knew about it and approved it, or was negligent in failing to discover and stop it, said Karl Brauer, senior analyst for Kelley Blue Book.
"Either situation reflects poorly on Winterkorn and his leadership skills, and given the tragic impact this scandal will have on VW, his resignation wasn't just likely, but necessary," he said.
In a statement Wednesday, Winterkorn said that, as chief executive during the entire period that the cheating occured, he accepts responsibility for the "irregularities that have been found in diesel engines."
"Volkswagen needs a fresh start -- also in terms of personnel," he said. "I am clearing the way for this fresh start with my resignation."
The cheating software, called a "defeat device," was installed in 11 million vehicles worldwide and threatens to destroy the credibility and market value of a global behemoth that was already showing signs of instability. On Friday, federal and state regulators said the German automaker used software in 482,000 of its diesel vehicles since the 2009 model year to cheat on U.S. emissions tests.
Volkswagen confirmed -- under pressure from the EPA and California regulators -- that it installed software to manipulate test results in diesel versions of five U.S. models over seven years: the Jetta (2009-15), Beetle (2009-15), Audi A3 (2009-15), Golf (2009-15) and Passat (2012-15).
The software employed an algorithm that automatically detects when the vehicle is undergoing pollution tests and changes how the engine performs. The algorithm sensed whether the car is in a testing environment by analyzing a variety of data -- steering position, speed, duration of engine operation and barometric pressure.
Away from the laboratory, in everyday driving, the cars emit up to 40 times the legally allowed amount of nitrogen oxide, regulators said.
Marketing the cars as "clean diesels" -- a sporty alternative to boring hybrids -- the automaker dominated the niche market for diesels, with more than half of U.S. market share.
Whatever profits those sales generated, the cheating will end up costing VW far more.
Facing as much as $18 billion in U.S. fines alone -- and liable for fines and punishments in other countries -- Volkswagen said it would also set aside $7.2 billion to cover the cost of recalls and "other efforts to win back the trust of our customers."
MORE ON VOLKSWAGEN EMISSIONS SCANDAL:
Volkswagen emissions scandal expands to 11 million vehicles
Will California DMV act to ensure drivers comply with VW recall?
U.S. taxpayers duped into shelling out $51 million in green subsidies for 'clean' VW vehicles
UPDATES
9:55 a.m.: This article was updated.
9:09 a.m.: Volkswagen's stock prices were added.
8:43 a.m.: This article has been updated with additional detail and analyst comment.
8:26 a.m.: This article was updated with background on the emissions scandal.
This article was first published at 8:07 a.m.
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