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VW CEO is out

Martin Winterkorn
VW CEO Martin Winterkorn. Volkswagen Chief Executive Martin Winterkorn attends the annual news conference of Volkswagen in Berlin March 12, 2015.

Martin Winterkorn has stepped down as CEO of Volkswagen.

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VW has been engulfed by an emissions-cheating scandal that it says has affected 11 million vehicles worldwide.

Winterkorn and VW released a statement:

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.

On Tuesday, German media reported that Winterkorn had quit and that he would be replaced by Porsche CEO Matthias Müller.

Winterkorn contradicted that report later Tuesday in a video posted to the company's website. But by midweek it became clear that Winterkorn might not make it to a scheduled Friday meeting of VW's supervisory board.

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No successor to Winterkorn has been named.

Following Winterkorn's resignation, CNBC reported that several additional VW executives could step down later this week. The VW Group has moved rapidly to address the crisis since news about the emission cheating broke. The US government reported confronted VW about the violations last year. 

The fate of VW, which has shed billions in market cap, now rests in the hands of the VW Group board.

The board is made up of VW Group executives, members of the Porsche family, representatives of the German state of Lower Saxony, where VW is headquartered, and the union that represents VW's workers.

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Last week, the US Environmental Protection Agency revealed that VW had installed "defeat device" software on nearly 500,000 VW and Audi vehicles equipped with a 2.0-liter TDI diesel engine. The software switched on full emission-control systems when the cars were being tested but switched it off during normal operation. This enabled VW to mask emissions of nitrogen oxide that exceeded the standards by up to 40 times.

Volkswagen swiftly admitted guilt and said millions of additional cars were affected globally.

Winterkorn recently survived a management crisis at VW that saw the departure of VW chairman Ferdinand Piëch. Winterkorn and Piëch were allies but had become rivals. Before the emissions-cheating scandal hit, it was expected that the VW board would meet this week to extend Winterkorn's contract through 2018.

VW stock was up 6% in trading on Wednesday, to 113 euros per share.

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Volkswagen has struggled in the US to establish itself at the top of the market. It currently holds a meager 2% market share. Globally, however, VW this year surpassed Toyota as the world's largest automaker.

"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," said Kelley Blue Book senor analyst Karl Brauer in an email.

"But VW's intentional, widespread efforts to deceive regulators across the globe suggests a dark side to the company's growth," he added. "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."

This is breaking, we'll update as we learn more.

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Screenshot via Yahoo Finance
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