Volkswagen braces for hit to business

Volkswagen has imposed a hiring freeze at its financing business and cut a shift at a German engine factory as it braces for a hit to business from cheating in diesel emissions tests.

Senior officials at the German carmaker will examine on Wednesday evening the initial findings of an internal investigation into the biggest business crisis in the company's 78-year history, a source familiar with the matter told Reuters.

Meeting at group headquarters in Wolfsburg, the supervisory board's executive committee will also prepare for an external investigation by a US law firm Jones Day, with an official from that firm to join part of the meeting, the source added.
 

Europe's largest carmaker has admitted to using software to rig diesel emissions tests in the United States. Germany's transport minister says it also manipulated tests in Europe, where Volkswagen sells about 40 per cent of its vehicles.

It is under huge pressure to get to grips with a crisis that has wiped more than a third off its market value, sent shock waves through the global auto industry and could damage Germany's economy.

VW Financial Services, which makes loans to car buyers and leases vehicles to fleet operators, said on Wednesday it was introducing a hiring freeze for the rest of the year.

"We are reacting to the current situation. It is a purely precautionary measure," a spokesman said.

At its Salzgitter engine factory, Volkswagen also cut one shift per week which it had initially put in place to meet higher demand.

New Chief Executive Matthias Mueller, who took over from Martin Winterkorn last Friday, has promised to find those responsible and to create a new business culture.

"Those people who allowed this to happen, or who made the decision to install this software - they acted criminally. They must take personal responsibility," supervisory board member Olaf Lies told the BBC.

Winterkorn, CEO for almost nine years, is being investigated by German prosecutors over allegations of fraud. The company suspended three top engineers on Monday and two sources familiar with the matter said on Wednesday that communications chief Stephan Gruehsem was expected to step down.

Investors view an external investigation as particularly important, given the close links of Mueller and chairman-designate Hans Dieter Poetsch to the Piech-Porsche clan that controls Volkswagen.

Shareholder advisory firm Hermes EOS said on Monday it had "real doubts" about Volkswagen's decision to appoint company insiders to top jobs to tackle the crisis.

German newspaper Handelsblatt reported on Wednesday that some investors were calling for Poetsch to stand aside. However, a spokesman for Porsche SE, the Piech-Porsche clan's holding company, said it continued to back Poetsch as chairman.