Audi's R&D Chief Leaves as Volkswagen's Diesel Scandal Inquiry Continues

By Markets

Audiheadquarters in Ingolstadt, Germany. Image source: Audi.

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The head of research and development at Volkswagen's(NASDAQOTH: VLKAY) luxury-car unit abruptly left the company on Monday, as VW's diesel scandal appeared to have claimed another executive.

A keyexecutive departs amid allegations

VW's Audi (NASDAQOTH: AUDVF) subsidiary issued a terse statement on Monday saying that its R&D chief, Stefan Knirsch, "is stepping down from his position with immediate effect and is leaving the company in agreement with the Supervisory Board."

Audi didn't give explain why Knirsch was leaving. But the move followed a report by German newspaper Bild am Sonntag last week that indicated Knirsch was likely to be suspended from his position.

According to the report, an ongoing investigation into the diesel cheating scandal by U.S. law firm Jones Day had established that Kirsch knew about the use of the cheating software in 3.0 liter diesel engines and gave a false statement about it while under oath.

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The 3.0 liter turbocharged V6 diesel engine is one of several engines that VW has admitted programming to cheat on government emissions tests. But unlike the others, which were developed by VW, the 3.0 engine was developed by Audi, which operates somewhat separately from its corporate parent.

Why it's significant for VW and Audi

Knirsch's abrupt departure suggests that the investigation is reaching the point of drawing some firm conclusions -- and that in turn suggests that other executives could follow him out the door.

It also suggests that Audi may have a more central role in the scandal than previously thought.

Knirsch, a longtime industry and Audi veteran, hadn't been on the job for long. He took over the top R&D role on Jan. 1, succeeding longtime Audi and VW engineering leader Ulrich Hackenberg -- himself a casualty of the scandal.

Hackenberg was closely associated with the VW team that developed the four-cylinder engines at the core of the scandal. He left the company after being suspended soon after VW admitted to the software's existence last year.

What's next for Volkswagen

The scandal first became public just over a year ago. The investigation has been underway for months, with almost no results reported to the public. But now, with Knirsch's departure -- and a separate Bild am Sonntag report saying that former VW CEO Martin Winterkorn was closely involved with VW's effort to hide some details from U.S. regulators before the scandal became public -- it seems likely that we're finally close to learning who was behind Volkswagen's decision to build millions of vehicles with the cheating software.

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