Winterkorn 'endlessly sorry' for diesel emission scandal; VW denies report of CEO's ouster

BERLIN/FRANKFURT (Reuters) -- Volkswagen CEO Martin Winterkorn today apologized again for the carmaker's cheating of diesel emission rules in the United States and pledged full cooperation with authorities involved.

"I am endlessly sorry that we betrayed the trust" of millions of people, Winterkorn said in a video statement posted on VW's website.

"Swift and comprehensive clarification has now utmost priority," the CEO said. "To make it very clear: manipulation at VW must never happen again."

Meanwhile, Volkswagen earlier today denied a report that Winterkorn was to be replaced by Matthias Mueller, the head of the automaker's Porsche sports car business.

A VW spokesman described the report as "ridiculous." A Porsche spokesman said Mueller was today at a VW management board meeting at its headquarters in Wolfsburg.

The Tagesspiegel newspaper today said in a report that Mueller, 59, will replace Winterkorn after the automaker admitted to cheating U.S. vehicles emissions tests. Winterkorn, 68, no longer has the board's trust, the paper said, citing unidentified sources.

Germany’s Hannoverschen Allgemeinen Zeitung also reported today the executive’s dismissal is imminent, citing unidentified members of the supervisory board. The newspaper had reported that senior board members and members of top VW management were already meeting. Citing board sources, the paper said Winterkorn had lost the support of major shareholders.

However, sources close to the VW supervisory board told Reuters the executive committee only planned to meet on Wednesday to discuss the emissions test scandal and the agenda of a full board meeting long scheduled for Friday.

Winterkorn did not mention his future in a video message posted on the company's website.

VW today said that 11 million of its cars could be affected worldwide by the emissions irregularities. Volkswagen sold 10.1 million cars in 2014.

The steering committee of VW Group's supervisory board was due to meet on Wednesday to discuss the crisis. The group wants a "comprehensive and fast" explanation from Winterkorn of the cheating on emissions tests, Handelsblatt reported, citing Bernd Osterloh, a labor representative on the committee.

The six-member inner circle is down to five members following the departure in April of Chairman Ferdinand Piech and prior to the formal election of his designated successor, Chief Financial Officer Hans Dieter Poetsch. The full board is due to meet on Friday -- a date scheduled before the scandal erupted last week -- to extend Winterkorn's contract until end-2018. 

Pressure to quit

Winterkorn is under increasing pressure over the falsification of emissions tests.  He oversees group r&d operations and ran the core Volkswagen brand between 2007 and 2015, including the period when some of its cars were found violating U.S. clean air rules.

Heads are certain to roll at Volkswagen once it becomes clear who at VW was responsible for the falsification of emissions tests, Olaf Lies, a German politician and VW supervisory board member, said. "I am sure that there will be personnel consequences in the end, there is no question about it," Lies told German radio station Deutschlandfunk today.

Workers' representatives on Volkswagen's supervisory board also will push for heads to roll, Osterloh told employees in a letter obtained by daily Bild earlier today.

"I can assure you that we will do everything possible in the supervisory board meetings this week to ensure the matter is cleared up quickly and that personnel consequences are drawn. And that will not just affect the rank and file, I can assure you," Bild quoted Osterloh as saying in the letter.

Some analysts suggest Winterkorn, who recently saw off a challenge to his leadership with the ousting of long-time chairman Ferdinand Piech, will have to go.

"Winterkorn either knew of proceedings in the U.S. or it was not reported to him," Evercore ISI analyst Arndt Ellinghorst said. "In the first instance, he must step down immediately. In the second, one needs to ask why such a far-reaching violation was not reported to the top and then things will get tough too."

Stock down 20%

VW stock tumbled another 20 percent to a four-year low today after the company said it would set aside 6.5 billion euros ($7.3 billion) in its third-quarter accounts to help cover the costs of the scandal.

VW also warned that sum could rise, adding diesel cars with so-called Type EA 189 engines built into about 11 million Volkswagen models worldwide had shown a "noticeable deviation" in emission levels between testing and road use.

VW could face penalties of up to $18 billion in the United States, as well as class-action lawsuits from buyers and damage to its reputation, with U.S. regulators alleging it misled them for more than a year.

German Chancellor Angela Merkel called for full transparency in clearing up the emissions tests scandal. "Given the difficult situation, this is about showing complete transparency, clearing up the entire case," Merkel told journalists today in Berlin. "The Transport Minister is in close contact with the company, Volkswagen. And I hope that the facts will be put on the table as quickly as possible," she said.

VW board member Stephan Weil, who is prime minister of Lower Saxony, which has a 20 percent stake in VW, said the warning on 2015 profit was "exceptionally unpleasant." The key Winterkorn ally withheld public support for the chief executive.

"I don't want to preempt the upcoming intense deliberations and will not comment on details or any consequences," Weil told reporters in Hanover when asked about Winterkorn's future.

Weil earlier this year helped Winterkorn fend off a challenge to his leadership by long-time chairman Ferdinand Piech and earlier this month backed the CEO's contract extension.

Automotive News Europe and Bloomberg contributed to this report