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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden (until 3.30) and Nick Fletcher

Volkswagen crisis: chief executive Martin Winterkorn resigns – as it happened

Volkswagen AG’s CEO Winterkorn has resigned.

And here’s our latest story on the VW scandal and Winterkorn’s decision to do the honourable thing:

Volkswagen has announced the resignation of its chief executive, Martin Winterkorn, and said the fallout from the diesel emissions test scandal would result in further executive scalps and a likely criminal investigation in Germany.

Winterkorn said on Wednesday he took full responsibility for the scandal, in which the company admitted that 11m cars were installed with a defeat device that reduced emissions under test conditions only, but he denied personal wrongdoing.

The company’s stock market value has fallen dramatically since the admission this week. As he resigned, Winterkorn described the situation facing the carmaker as a “grave crisis”.

Volkswagen faces up to £12bn in fines and is the subject of multiple investigations after the US Environmental Protection Agency accused it of manipulating tests on 18 September. Its executive committee said on Wednesday that it had voluntarily submitted a complaint to the state prosecutors’ office in Brunswick.

“In the view of the executive committee, criminal proceedings may be relevant due to the irregularities,” it said.

Full story here:

On that note, it’s time to close up for the evening. Thanks for all your comments and we’ll be back to cover all the latest developments.

Here’s our explanation of how the defeat device worked and how VW cheated in emissions tests:

This is not the first time Volkswagen has run foul of US authorities over pollution controls, CNBC is reporting:

Volkswagen has had a previous run-in with U.S. authorities for selling vehicles that used so-called “defeat devices” to disable pollution-control systems in four models of its vehicles produced in 1973.

News reports archived by the nonprofit Center for Auto Safety show the German automaker, then known as Volkswagenwerk AG, and its American subsidiary, Volkswagen of America, paid a $120,000 fine in March 1974 to settle a complaint filed by the Environmental Protection Agency over the use of so-called “defeat devices” that disabled certain pollution-control systems. The complaint said the use of the devices violated the U.S. Clean Air Act.

Don’t question all diesel technology or the whole German motor industry because of the VW scandal, is the plea from the country’s VDA auto industry association. Reuters reports:

The head of VDA warned on Wednesday against calling into question all diesel technology because of the crisis at Volkswagen.

“One shouldn’t make the mistake of using this case where software was manipulated to produce better test results to call into question all diesel technology,” VDA chief Matthias Wissmann said.

“The diesel that is used by the German auto industry in many configurations is a major driver of the reduction in CO2 emissions worldwide. Therefore we need a clear separation here,” he added. “My plea is, no general suspicion towards the German auto industry.”

Here’s the view of one of Volkswagen’s biggest shareholders on the scandal. The BBC has spoken to AXA fund manager Gilles Guibout about Winterkorn’s resignation and the accusations against the company:

There was no alternative - it is an attempt to keep the fire under control. He has tried to take all the responsibility but it is not easy to say if this will be enough.

[The allegations have] been a real shock. We are a long term shareholder and we put a lot of emphasis on management credibility. The fall in the share price was too big for us to sell - it would not be in our clients’ interest to sell.

Volkswagen shares recovered some of the losses they have sustained since the emissions scandal broke at the start of the week. They closed 5.19% higher at €111.5, but the company has still lost around €26bn of value following the crisis.

Overall European markets have - mostly - regained some ground, helped by the rebound in VW and comments from European Central Bank president Mario Draghi that the bank was ready to adjust its QE programme if necessary in the light of economic circumstances. He told the European parliament:

The asset purchase programme has sufficient in-built flexibility. We will adjust its size, composition and duration as appropriate, if more monetary policy impulse should become necessary.

With a rebound in commodity prices despite yet more weak Chinese data, the final scores showed:

  • The FTSE 100 finished up 1.62% or 96.4 points at 6032.24
  • Germany’s Dax added 0.44% to 9612.62
  • France’s Cac closed up 0.1% at4432.83
  • Italy’s FTSE MIB rose 0.18% to 21,068.88
  • But Spain’s Ibex ended down 0.79% at 9474.6
  • In Athens the market fell 1.32% to 668.54

On Wall Street, the Dow Jones Industrial Average was hit by weak US manufacturing data, which showed growth at a two year low in September, and is currently 106 points or 0.6% lower.

Volkswagen’s supervisory board has admitted criminal charges could follow after the revelation of the emissions scandal, and it has called in the state prosecutor.

As mentioned earlier it plans to set up a task force to investigate what happened, with external advisors.

It also thanked Martin Winterkorn for his “invaluable contributions” to VW and noted he had no knowledge of the manipulation of emissions data.

And it warned anyone found to have committed wrongdoing would face the consequences. Here is the full statement:

1. The Executive Committee takes this matter extremely seriously. The Executive Committee recognizes not only the economic damage caused, but also the loss of trust among many customers worldwide.

2. The Executive Committee agrees that these incidents need to be clarified with great conviction and that mistakes are corrected. At the same time, the Executive Committee is adamant that it will take the necessary decisive steps to ensure a credible new beginning.

3. The Executive Committee has great respect for Chairman Professor Dr. Winterkorn’s offer to resign his position and to ask that his employment agreement be terminated. The Executive Committee notes that Professor Dr. Winterkorn had no knowledge of the manipulation of emissions data. The Executive Committee has tremendous respect for his willingness to nevertheless assume responsibility and, in so doing, to send a strong signal both internally and externally. Dr. Winterkorn has made invaluable contributions to Volkswagen. The company’s rise to global company is inextricably linked to his name. The Executive Committee thanks Dr. Winterkorn for towering contributions in the past decades and for his willingness to take responsibility in this criticall phase for the company. This attitude is illustrious.

Board members Wolfgang Porsche, Berthold Huber, and Stephan Weil.
Board members Wolfgang Porsche, Berthold Huber, and Stephan Weil. Photograph: Julian Stratenschulte/dpa/Corbis

4. Recommendations for new personnel will be presented at the upcoming meeting of the Supervisory Board this Friday.

5. The Executive Committee is expecting further personnel consequences in the next days. The internal Group investigations are continuing at a high tempo. All participants in these proceedings that has resulted in unmeasurable harm for Volkswagen, will be subject to the full consequences.

6. The Executive Committee have decided that the company will voluntarily submit a complaint to the State Prosecutors’ office in Brunswick. In the view of the Executive Committee criminal proceedings may be relevant due to the irregularities. The investigations of the State Prosecutor will be supported in all form from the side of Volkswagen.

7. The Executive Committee proposes that the Supervisory Board of Volkswagen AG create a special committee, under whose leadership further clarifying steps will follow, including the preparation of the necessary consequences. In this regard, the Special Committee would make use of external advice. Further details about this will be decided at the Supervisory Board meeting on Friday.

8. The Executive Committee is aware that coming to terms with the crisis of trust will be a long term task that requires a high degree of consistency and thoroughness.

9. The Executive Committee will work on these tasks together with the employees and the Management Board. Volkswagen is a magnificent company that depends on the efforts of hundreds of thousands of people. We consider it our task that this company regains the trust of our customers in every respect.

Updated

Martin Winterkorn had no choice but to go following the discovery of the emissions scandal, says Karl Brauer at auto industry analyst Kelley Blue Book:

With more than 20 years at Volkswagen AG, during which he rapidly rose through the ranks to lead the automaker, Winterkorn appeared ready to bask in the glory of seeing VW become the world’s largest automaker.

But VW’s intentional, widespread efforts to deceive regulators across the globe suggests a dark side to the company’s growth. This activity has been going on for years, meaning Winterkorn either had full knowledge of the deception, and approved it, or he was negligent in uncovering and stopping it. 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.

Winterkorn.
Winterkorn. Photograph: John Macdougall/AFP/Getty Images

Volkswagen says it will create a task force with an external advisor to look into the emissions scandal.

Further heads are likely to roll after Martin Winterkorn’s resignation, with more news expected after Friday’s board meeting.

Updated

No word either on any compensation for Winterkorn. Which if it happens is likely be be controversial, to say the least.

No news yet on a successor to Winterkorn, although reports on Tuesday suggested he could be replaced by Matthias Müller, the current chief executive of Porsche. This was denied at the time.

Matthias Müller.
Matthias Müller. Photograph: Action Press/REX Shutterstock/Action Press/REX Shutterstock

Volkswagen shares have reacted favourably to the news of Winterkorn’s departure, with investors perhaps sensing there could indeed now be a fresh start as he suggested.

Up around 5% before the news, they now stand 8.35% higher at €114.

The news of Winterkorn’s resignation comes a day after he vowed to stay on and repair the damage from the emissions scandal which has rocked the company and the motor industry.

A meeting of the supervisory board today seems to have sealed his fate. It’s hard to know which would have been worse: him knowing about the falsification of emission tests, or him not knowing.

Here’s the full statement from WInterkorn:

“I am shocked by the events of the past few days. Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group.

As CEO I accept responsibility for the irregularities that have been found in diesel engines and have therefore requested the Supervisory Board to agree on terminating my function as CEO of the Volkswagen Group. I am doing this in the interests of the company even though I am not aware of any wrongdoing on my part.

Volkswagen needs a fresh start - also in terms of personnel. I am clearing the way for this fresh start with my resignation.

I have always been driven by my desire to serve this company, especially our customers and employees. Volkswagen has been, is and will always be my life.

The process of clarification and transparency must continue. This is the only way to win back trust. I am convinced that the Volkswagen Group and its team will overcome this grave crisis.”

VW boss goes

VW chief executive Martin WInterkorn has resigned over the emissions scandal.

BREAKING NEWS


Volkswagen will reportedly hold a press event. shortly.

An earlier tweet suggesting the event was in London has been deleted.

Updated

More fallout from the VW scandal: platinum has dropped to a six and a half year low.

The metal is used in diesel catalysts to clean up emissions, but obviously with the VW crisis, there could be less demand in future for diesel cars. It fell as low as $925.3 an ounce - its lowest since January 2009 - before recovering to $930.5, down 0.6%.

Platinum price falls.
Platinum price falls. Photograph: Andreas Koschate/Andreas Koschate/Westend61/Corbis

Fitch: VW's reputation will be hurt badly

Fitch does makes some serious points about Volkswagen’s crisis, as it puts the company on rating watch negative - the first step to a downgrade.

It says the rating action

  • reflects the damage on its reputation following alleged manipulation of emission tests
  • A decision on whether to downgrade VW will be made when there is more clarity about the magnitude and timeframe of the costs, and the impact on regulators and consumers worldwide
  • It expects VW’s brand image and reputation with regulators and consumers worldwide to be seriously undermined by crisis
  • It expects total cash outflows to be several billions euros over the next two years

Quick out of the blocks as ever, rating agency Fitch has just concluded that it might cut Volkswagen’s credit rating over this scandal.

Updated

Lawyers: VW could face huge consumer claim in UK

Volkswagen could face one of the biggest legal claims from UK consumers ever, say lawyers.

Boz Michelowska, a partner and consumer goods expert at law firm Leigh Day, believes legal cases could be brought in Britain if VW vehicles here were able to bypass the European emissions tests.

Michelowska explains:

“If it is shown that this piece of software defeated the European testing then Volkswagen would be in a very similar position as in the US and may well then have to call in their cars with all the resulting costs involved.

“This could well lead to one of the largest group claims ever in this country against Volkswagen for the way in which consumers may have been misled in relation to their vehicle.”

Importantly, the new Consumer Rights Act, which comes into force in October, will allow consumers to band together in ‘collective actions’ against companies.

Eleven million VW cars with ‘defeat devices’ were sold worldwide, so it is likely that a significant number were bought by UK drivers.

And anyone who owns a VW diesel could suffer financially from this crisis. The resale value of their vehicles is unlikely to have risen, after all.

There’s not much precedent for a claim of this type. Leigh Day suggests problems with faulty hip replacements in the UK; a serious problem, but one which only affects tens of thousands of people.

Updated

Back in Germany, prosecutors have said they are conducting a preliminary investigation into Volkswagen.

Reuters has the details:

Prosecutors of the German state Niedersachsen said in a statement they were looking into an investigation against Volkswagen employees as they had received a number of criminal complaints from citizens.

Heads-up. Mario Draghi, president of the European Central Bank, is about to testify to MEPs at the European Parliament. Here’s a livefeed.

Draghi is unlikely to touch on the Volkswagen scandal (alas), but may make some important points about the eurozone economy, and the prospect of further stimulus measures.

Updated

Volkswagen CO2 emission scandal<br>23 Sep 2015, Frankfurt, Rhineland, Germany --- Visitors check out a VW engine at Volkwagen’s pavilion of the 66th International Auto Show, in Frankfurt, Germany, 23 September 2015. After news of ‘Dieselgate’ went international, rumors circulate that Winterkorn is being replaced by Matthias Mueller, the current CEO of Porsche. Volkswagen, lost 36 percent of its value by 22 September after admitting that there are 11 million diesel vehicles that are affected by the emission problem worldwide. --- Image by © Horacio Villalobos/Corbis
Visitors check out a VW engine at Volkwagen’s pavilion of the 66th International Auto Show, in Frankfurt today. Photograph: Horacio Villalobos/Corbis

The damage to VW’s market value this week is quite staggering:

Germany’s financial watchdog, Bafin, is conducting a ‘routine’ investigation into the slump in Volkswagen’s shares this week.

The probe will look into whether VW released market-sensitive information in a timely manner.

The company’s shares slid 19% on Monday, after US authorities accused it of cheating on emissions tests last Friday, and forced it to recall 482,000 cars.

However it didn’t announce until late Tuesday morning that 11 million vehicles were affected, triggering a second share slump.

German minister denies Greens' claims over VW

German Transportation Minister Alexander Dobrindt makes a telephone call prior to the weekly cabinet meeting at the chanecllery in Berlin, Germany, today
German Transportation Minister Alexander Dobrindt on the phone before the weekly cabinet meeting at the chanecllery in Berlin, Germany, today. Photograph: Michael Sohn/AP

Back in Berlin, transport minister Alexander Dobrindt has denied knowing that German carmakers were rigging emission tests (as claimed earlier)

He told reporters:

“I have made it very clear ... that the allegations of the Greens party are false and inappropriate.

“We are trying to clear up this case. Volkswagen has to win back confidence.”

Updated

France’s energy minister Segolene Royal has vowed that Paris will be “extremely thorough, extremely severe” line with Volkswagen.

She told reporters that it was unacceptable to sell vehicles whose environmental credentials were false:

The victims are workers whose situation has been made more precarious, consumers who were duped and also the state which pays subsidies for purchases of clean vehicles.”

How much did Berlin know?

The Germany government is being dragged into the VW scandal, and faces accusations that it knew that carmakers could falsify emissions data.

It’s emerged that the transport ministry mentioned the issue in July, in response to a question from the Green party.

The Financial Times has a good take:

In a written response to a question from the Green party, the German transport ministry said: “The federal government is aware of [defeat devices], which have the goal of [test] cycle detection.”

The Greens asked if the ministry was aware of the deployment of defeat device software in new vehicles, and it replied: “We have no knowledge of this.”

There was no specific question about VW and defeat device software from the Greens, and the ministry did not refer to the company.

However, the ministry answered the question on July 28, prompting accusations that Berlin had been aware of the potential for cheating in the industry for months.

The ministry added that it shared the European commission’s view that there are “no extensively proven means of preventing defeat devices”.

Defeat devices are the software used by VW to cut how much NOx gases were pumped out during an emissions test.

The Green party now claims that Angela Merkel’s government knew more than it has admitted.

Oliver Krischer, Green party deputy leader, told the N24 TV station last night that:

The government told us in July that it knew about this software that has been used in the USA, and they clearly knew that the software was widely in use.

The government worked together with the auto industry, not to ensure that the emissions levels were reduced, but so that the measuring system was set up in such a way that on paper the cars met the necessary standards.

Updated

Nobody knows how bad this crisis could become, says Saxo Bank’s head of equity strategy, Peter Garnry.

For a start, Volkswagen hasn’t put aside enough money to cover the costs. Yesterday it announced a provision of €6.5bn, which is dwarfed by its potential fine from US regulators, which could hit $20bn.

Garnry adds that this is no longer just an isolated case in the US - given this software was installed on 11m vehicles worldwide, not just half a million in America.

Also, is this an issue that extends across the industry?

Why should Volkswagen be the only one? If they were the only one who cheated on the emission data they would be standing out from the competition so much that everyone would be wondering, but they’re not.

Here’s Garnry’s video interview on Volkswagen.

Saxo's Peter Garnry

Updated

Journalists and television crews have taken their position outside an entrance of the Volkswagen plant in Wolfsburg, Germany, 23 September 2015. Volkswagen’s board began a crisis meeting on 23 September that could decide the future of board chairman Martin Winterkorn, as Europe’s biggest carmaker struggles to respond to a deepening emissions testing scandal. The carmaker’s weekend admission that it had installed sophisticated software in its diesel models aimed at beating US exhaust tests has sent shockwaves through the German auto industry. EPA/JULIAN STRATENSCHULTE
Journalists and television crews are stationed outside the Volkswagen plant in Wolfsburg, Germany, as the company’s board members meet. Photograph: Julian Stratenschulte/EPA

Updated

This scandal could have very serious consequences for the German city of Wolfsburg, which was created in the 1930s to build the Beetle.

Bloomberg reports:

‘If you’d visualise traffic in and out of the city, it would look like a pulse and the heart is the VW plant,’ cab driver Karsten Raabe says as he steers his Skoda by the sprawling complex, where hundreds of gleaming cars sit in parking lots and on the back of freight trains.

‘Without VW, this city and the entire region would die. We’d become a European Detroit,’ which declared the biggest US municipal bankruptcy in 2013.

The town has already taken one hammering this week; Wolfsburg was on the wrong end of a 5-1 defeat to Bayern Munich last night.

Updated

Some brave investors in Frankfurt are buying into Volkswagen.

This has pushed its share price up around 3% today to €109, a far cry from the €162 on Friday before the emissions bombshell landed.

Martin Winterkorn should do the right thing and resign now, argues our finance editor Nils Pratley.

Either Winterkorn knew what was going on, or he should have done.

If he knew the company had installed software to cheat US emissions tests, the end of his business career will be the least of his problems. If he didn’t know, he’s failed to do his job properly. Either way, he should have resigned from a well-paid post he has held since 2007.

The scandal also doesn’t reflect well on Germany’s corporate governance, Nils adds:

It’s also astonishing that Volkswagen’s supervisory board didn’t insist on an immediate resignation. If this was a UK-listed company – a leading member of the FTSE 100 index – it is safe to say the chief executive would have received his marching orders on day one.

VW board holds crisis meeting

The Volkswagen plant in Wolfsburg, Germany, last night.
The Volkswagen plant in Wolfsburg, Germany, last night. Photograph: Julian Stratenschulte/AP

The executive committee of Volkswagen’s board is meeting now to discuss the crisis that has rocked Germany’s largest carmarker, according to local reports.

Top of the agenda is whether to fire CEO Martin Winterkorn after the company admitted installing software to fool emissions testing in 11m cars, issued a profits warning, and set aside €6.5bn to cover the costs.

The board are certain to grill Winterkorn intensively; how much did he know about the illicit code, and for how long?

Winterkorn is famous in the industry for his engineering acumen. He isn’t a beancounter who wouldn’t have been interested in the nitty-gritty of how his cars performed, or how they managed to pass tough US emissions exams.

However, the VW board could be reluctant to haul Winterkorn into the pits today, as the scandal is only just unfolding.

A source familiar with the deliberations has told Reuters that the board is in a “tricky situation”, trying to make a decision without yet knowing the full extent of the CEO’s role in the scandal.

Updated

VW faces class actions

Volkswagen faces the prospect of a massive legal battle over the emissions-fixing scandal, as customers seek redress.

Several legal firms have already filed class action lawsuits. The latest is Clifford Law of Chicago, who argues that consumers who bought a VW car have been shortchanged.

Sky News has the details:

A US law firm has begun a class action lawsuit against Volkswagen over the ‘defeat devices’ used to fool exhaust emissions tests.

Robert Clifford, partner at Chicago’s Clifford Law, said the impact on consumers was ‘massive’ and that car buyers had not got what they paid for.

Mr Clifford said people were also affected because of ‘diminution of value’ – meaning their car could now be worth less.

The law suit has been filed at a district court in northern Illinois.

More here: firm launches Volkswagen emissions lawsuit

Another law firm, Hagens Berman of Seattle, filed a lawsuit seeking class-action status over the weekend, shortly after VW was accused of cheating on US emission tests.

A Canadian legal outfit, Sutts, Strosberg LLP of Windsor, Ontario, is seeking $1bn in damages and an additional $100m.

Lawyer Harvey Strosberg told a press conference on Tuesday that any Canadian with a Volkswagen diesel car made before September 2015 can add their name to the suit.

Faced with this phalanx of m’learned friends, Volkswagen has hired the US law firm Kirkland & Ellis LLP.

Kirkland & Ellis led BP’s defence after the Deepwater Horizon disaster in the Gulf of Mexico. Volkswagen’s emissions scandal is arguably the biggest corporate crisis since BP.

Updated

The Volkswagen crisis comes at a tricky time for Europe’s industry, given China’s slowdown.

New data released this morning shows that private sector growth across the eurozone dipped this month, with factory growth at a five-month low. More here.

Eurozone factory PMI
Eurozone factory PMI Photograph: Markit

Australia’s stock market has hit a two year-low, following the weak Chinese factory data released this morning:

Volkswagen shares are pretty volatile today. They’re currently flat for the day, after plunging 10% at the open.

It’s almost suspicious.....

“It’s unusual for events in a single company to become a driver of global markets but that’s what is happening now with Volkswagen”.

So says Kit Juckes, senior strategist at French bank Société Générale, adding:

The woes of the world’s second-biggest car manufacturer are doing nothing for economic optimism or risk appetite and they are undermining the euro, against both dollar and yen.

Over in Paris, shares in Renault and Peugeot have both fallen by over 5%:

Volkswagen shares slide in early trading

Volkswagen’s share price fell as much 10% at the start of trading in Frankfurt, before stabilising.

Investors are try to calculate the full damage that this crisis will cause to the company, ahead of today’s crucial board meeting.

Other car firms are being dragged down too; reflecting fears that the European auto industry will be dragged into the scandal.

Dax fallers, September 23
Top fallers on the DAX this morning Photograph: Thomson Reuters

Updated

Volkswagen’s rigging of emissions tests for 11m cars means they may be responsible for nearly 1m tonnes of air pollution every year.

That’s roughly the same as the UK’s combined emissions for all power stations, vehicles, industry and agriculture, a Guardian analysis suggests.

More here:

Mike Hawes, chief executive of the UK’s Society of Motor Manufacturers and Traders (SMMT), is defending the industry.

He tells the Today Programme that Europe is improving its testing system; technology will soon allow cars to be tested on the road, not just in the labs.

[explainer: VW used secret software to turn on its pollution control systems when the car was being tested for emission levels, but turned them off when on the road]

But is there a future for diesel, given what we’re now learning?

Diesels continue to emit 15% fewer carbon emissions than petrol, Hawes says, and the problem of harmful particulates has been solved too.

But 12,000 people a year could be dying because the car industry has not met emissions levels....

Hawes concedes that the nitrogen oxides, or NOx, gases emitted by diesel cars are a bigger problem for health than first recognised.

Updated

Consumer trust broken by "The cheater in the room"

Monique Goyens, Director General of BEUC, which represents European Consumer Organisations, is discussing the crisis on the Today Programme now.

How much confidence can consumers have in the car industry?

This is certainly a scandal, but not a surprise to European consumer groups, Goyens says.

This scandal has been allowed to happen because the entire system is flawed. There is no room for independent testing, or on-the-road testing, she explains, adding:

“It does not deserve the consumer’s trust if there is a cheater in the room, which there was in this case.

How could this happen in Europe, though, when cars are being randomly taken off the production line and tested?

Goyens explains that there is a “trend of deregulation” in Europe, which limits the resources given to those who control the market -- be it for cars, food, or financial services.

“When you limit the resources to the market, you open the safety net and give more room to cheating”

Updated

The VW crisis is a blow to the reputation of Germany’s manufacturing base.

Professor Karel Williams from Manchester Business School, told Radio 4’s Today Programme that:

Germany has been lecturing the Greeks for years on how they cheated on the budget deficit calculations and now look at this Germany’s largest company is cheating on emissions.

It’s not just a crisis for the company… it is a major set of issues about ineffective regulation as in Libor… and all the rest of that.

Updated

Germany’s Deutsche Bank has just cut its recommendation on Volkswagen from ‘buy’ to ‘hold’, and slashed its earnings forecasts by up to 35%.

Deutsche also warned that the full magnitude of the scandal can’t be calculated yet.

The legal fees will be “very painful” but manageable, it says. The impact on VW’s operations, though, could be even tougher.

Deutsche has also cut its forecasts for German’s DAX index, which is heavy with auto companies (VW, BMW, Daimler....)

Chinese stock market slides after weak factory data

Over in Shanghai, the main Chinese stock market has closed 2% lower after today’s weaker-than-feared factory data.

The news that manufacturing output is falling at the fastest rate since 2009 (see here) spooked traders, and alarmed analysts.

HSBC economist Frederic Neumann warned:

New export orders have really collapsed. It means global trade is facing headwinds, and even China can’t escape that

It’s not so bad that we need to hit the alarm button, but the decline in the economy is evident.

This breakdown of today’s PMI report confirms that the Chinese factory sector is deteriorating:

Chinese PMI
Chinese PMI Photograph: Markit

VW scandal dominates the front pages

You know your company is facing a crisis when its woes are splashed across the front pages of Britain’s newspapers:

Guardian: VW chief Martin Winterkorn defiant over emissions cheating scandal

Telegraph: Millions of petrol cars could also be rigged in scandal

FT: Volkswagen shares tumble as inquiries are launched worldwide

The Times: Volkswagen in meltdown after faked diesel tests

Updated

VW CEO's fate could be sealed today

(FILES) Martin Winterkorn, CEO of German carmaker Volkswagen (VW) attends the company’s annual press conference on March 13, 2014 in Berlin. Volkswagen chief Martin Winterkorn on Tuesday offered his “deepest apologies” for the pollution-cheating scandal engulfing the auto giant and threatening to tarnish Germany’s industrial reputation AFP PHOTO / JOHANNES EISELEJOHANNES EISELE/AFP/Getty Images
Martin Winterkorn Photograph: Johannes Eisele/AFP/Getty Images

Volkswagen CEO Martin Winterkorn’s fate could be decided today, as the company’s board meets to discuss the crisis.

There are reports that the board began meeting last night, earlier than planned, after chancellor Angela Merkel insisted on ‘full transparency’ into the crisis.

The board will surely demand to know how much Winterkorn knew about VW’s illicit scheme, which used software to detect when a car was being tested and secretly cut its emissions.

Bloomberg has some more detail:

The 68-year-old CEO’s survival hangs on convincing a few key power players, including Wolfgang Porsche, head of the family that controls a majority of VW’s voting shares; Bernd Osterloh, VW’s influential labor leader; and Stephan Weil, prime minister of Lower Saxony, which has special blocking rights at the company.

All three are on the committee, which is set to vote on his future.

Updated

Traders in Frankfurt are predicting that Volkswagen’s share price will fall again today, when the market opens in around 20 minutes.

Introduction: Chinese jitters and the VW crisis

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

Two stories are going to dominate today. The unfolding crisis at German carmaker Volkswagen, and fresh fears over China’s economy after more weak economic data overnight.

VW’s board are to meet today, with the future of the company in serious doubt after it admitted installing software in 11 million diesel-powered cars to cheat emissions tests.

Overnight, the New York attorney general announced that his office will join the string of investigations into VW, whose share price has crumbled by a third in two days.

CEO Martin Winterkorn is now fighting for his job, after apologising to customers and the authorities yesterday.

And with Angela Merkel pushing for answers, and the UK demanding a EU-wide inquiry, the crisis has much further to run.

Europe is also bracing for the impact of China’s slowing economy, after factory output across the country fell at the fastest rate since the financial crisis

The preliminary Caixin China PMI dropped to 47.0 in September, from 47.3 in August. That’s the weakest reading since March 2009. Any number below 50 shows a contraction, so this fuels more fears of a Chinese hard landing.

Chinese PMI
Chinese PMI over the last 10 years Photograph: Markit

Also coming up today:

  • 9am BST: The flash eurozone PMI data, showing how Europe’s factories are faring this month
  • 2pm BST: Mario Draghi, ECB president, testifies to the European Parliament. His comments on China and the eurozone economy will be watched closely.

Updated

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A viral Instagram post has sparked speculation about Selena Gomez and Benny Blanco's relationship, but no verifiable evidence supports claims of a breakup or divorce.
International Business Times UK
International Business Times UK
ER visits for tick bites hit the highest level in nearly a decade. Here’s what to do if you find one
Some 31 million Americans are bitten by ticks each year
The Independent UK
The Independent UK
Utah man goes to Lowe’s parking lot. Then he sees a truck selling 20 ribeyes for $39.99. Are they a ‘scam?’
A Utah man saw a strange deal in the Lowe’s parking lot. Curious, he ended up buying in, only to realize later that “Primehouse Direct steaks” may not have been worth the price. 
The Mary Sue
The Mary Sue
Charles Melton’s Towel Pics Are Melting the Internet
Charles Melton just did a photo shoot for Men’s Health and the fans are sweating. Sometimes, especially on challenging days, you just have to sit and enjoy the view.
The Mary Sue
The Mary Sue
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