Volkswagen shares tumbled more than 20 percent on Monday, their biggest ever one-day fall, as the German carmaker was plunged into turmoil by accusations from U.S. authorities that it falsified emissions data.
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The U.S. Environmental Protection Agency said on Friday Europe's biggest carmaker used software for diesel VW and Audi branded cars that deceived regulators measuring toxic emissions and could face up to $18 billion in penalties.
The scandal has emerged just as VW was hoping to move on from a damaging leadership battle, with a supervisory board meeting on Friday due to discuss a new company structure and management line-up.
Some analysts said Chief Executive Martin Winterkorn, who said on Sunday he was "deeply sorry" for the breach of U.S. rules and ordered an external investigation, should quit.
"This disaster is beyond all expectations," said Ferdinand Dudenhoeffer, head of the Center of Automotive Research at the University of Duisburg-Essen.
Winterkorn, who recently saw off a challenge to his authority with the ousting of long-time chairman Ferdinand Piech, ran the VW brand between 2007 and 2015, including the six-year period when some of its models were found violating U.S. clean air rules.
A VW spokesman was not immediately available to comment.
A source close to the company said any decision on emissions control mechanisms would have been taken at the group's Wolfsburg headquarters, and not by regional divisions.
VW overtook Japan's Toyota in the first half of this year to become the world's biggest carmaker by sales, but is facing a sharp slowdown in its most profitable market, China.
The U.S. scandal also adds to the challenge it faces in reviving its North American business, which has long lagged its performance elsewhere.
At 0955 GMT, VW shares were down 20.4 percent at 129.3 euros, after hitting a three-year low of 125.4 euros.
"This is bad stuff. It smells of lack of control, hubris and denial," London-based Arndt Ellinghorst of Evercore ISI said on Monday, predicting management heads would roll.
The scandal will be discussed at Friday's 20-member supervisory board meeting, a source close to the board said.
Some analysts have long criticized VW's centralized management system, saying it has delayed product launches and hampered its ability to compete in overseas markets.
German rivals Mercedes-Benz and BMW said on Monday the accusations made by U.S. authorities against VW did not apply to them.
(Editing by Jane Merriman and Mark Potter)