Volkswagen seeks new CEO as pollution scandal spreads

Auto giant Volkswagen searched Thursday for a new chief to steer it out of a global pollution cheating storm, as suspicions over diesel car emissions spread for the first time to fellow German manufacturer BMW.

Shares in top-of-the-range automaker BMW skidded nearly 10 percent at one point after the weekly Auto Bild reported that emissions from one of its diesel models were 11 times higher than European Union norms. 

ALSO READ: Volkswagen CEO Martin Winterkorn resigns over biggest scandal in 78-year history

There was no indication that BMW had engaged in deception similar to Volkswagen`s by using software to fool official pollution tests but the report of high emissions from one of its diesel-engine cars nevertheless shook investors.

BMW shares plunged as far as 9.7 percent to a low of 72.05 euros on the Frankfurt stock exchange.

VW chief executive Martin Winterkorn resigned Wednesday over the scandal, which has sparked a US criminal investigation and international legal action with as-yet incalculable financial costs.

Saying he was "stunned that misconduct on such a scale was possible in the Volkswagen group," Winterkorn said he accepted responsibility as chief executive for the manipulation of diesel emission tests.

ALSO READ: Volkswagen to announce new CEO Friday: Board

The 68-year-old said he was "not aware of any wrong doing" on his part. 

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

Investors appeared to agree.

VW shares shot up 7.9 percent to hit a high of 120.30 euros in the morning in Frankfurt. Besides the resignation, investors appeared to be unable to resist the price following a 35-percent meltdown that wiped 25 billion euros ($28 billion) off the company`s market value on Monday and Tuesday. 

Even if the haemorrhage on the markets may have abated, Volkswagen, the world`s largest auto manufacturer by sales in the first half of this year, still faces a growing tangle of legal threats after it admitted that as many as 11 million of its diesel cars worldwide are equipped with software capable of fooling official pollution tests.It now needs a chief executive to steer it through the difficult terrain ahead.

Rumours of potentially successors circulated widely on German media but it seems likely the new boss will come from one of the sprawling family of brands that make up the group. 

The global empire owns brands such as SEAT in Spain, Skoda in the Czech Republic, Audi and Porsche in Germany, Lamborghini in Italy and Bentley in Britain.

Three men appear to have emerged as candidates. 

Matthias Mueller, the 62-year-old head of the luxury sports car maker Porsche, had already been tipped to replace Winterkorn during the latter`s bitter feud with his one-time mentor and former supervisory board chief Ferdinand Piech this year.

Herbert Diess, 56, a defector from rival maker BMW who is currently head of the VW brand and has a reputation as a cost-killer, has been mooted as possible candidate.

The 52-year-old head of VW`s luxury brand Audi, Rupert Stadler, is also said to be in the running. 

The supervisory board is scheduled to meet on Friday to find a new chief executive charged with restoring the group`s reputation and handling mounting worldwide legal action over the pollution scandal.

In addition to investigations from France to South Korea, public prosecutors in Germany said they were examining information and evaluating legal suits already filed against the company by a number of private individuals to decide whether to launch a full criminal inquiry against those responsible.

According to the US authorities, VW has admitted that it equipped about 482,000 cars in the United States with sophisticated software that covertly turns off pollution controls when the car is being driven.

It turns them on only when it detects that the vehicle is undergoing an emissions test.

With the so-called "defeat device" deactivated, the car can spew pollutant gases into the air, including nitrogen oxide, in amounts as much as 40 times higher than emissions standards, said the US Environmental Protection Agency (EPA).

The EPA is conducting an investigation that could lead to fines amounting to a maximum of more than $18 billion.

The US Department of Justice has also launched a criminal inquiry. 

New York Attorney General Eric Schneiderman said he had launched his own probe of Volkswagen and would work on it with prosecutors from other states across the United States.

Private law firms are lining up to take on the German company, with a class action suit already being filed by a Seattle law firm.

Volkswagen has set aside 6.5 billion euros in provisions for the third quarter to cover the potential costs of the revelations. 

The German company is likely to face tough questioning in the US House of Representatives` energy and commerce committee, which announced plans for a hearing in the coming weeks.