Volkswagen CEO Martin Winterkorn resigns amid diesel emissions scandal

The company is under investigation for the manipulation of US diesel car emissions tests. The group confessed it had deceived US regulators in the tests by installing a device to provide more positive results.

Chicago law firm Clifford Law said it has begun a class action lawsuit against the group at a district court in northern Illinois. The complaint was filed on behalf of two Volkswagen owners, who said they would not have bought the vehicles if they had known they were not environmentally friendly.

Winterkorn said in a company statement that he was "shocked by the events of the past few days".

"Above all, I am stunned that misconduct on such a scale was possible in the Volkswagen Group."

On his resignation, he said he was not aware of any wrongdoing on his part but had accepted responsibility for the irregularities found in diesel engines. He said he had requested the Supervisory Board to agree on terminating his role as CEO.

"I am doing this in the interests of the company even though I am not aware of any wrong doing on my part," Winterkorn said.

"I am clearing the way for a fresh start with my resignation."

Volkswagen has said it has set aside €6.5bn to cover costs of the issue which involves 11 million vehicles.

Michael Hewson, chief market analyst at CMC Markets, warned the problems at the group could cause a trickedown effect in Germany's economy in the fourth quarter.

"The German auto sector makes up a significant part of German GDP, not only from exports, but also further down the supply chain," he said.

"Any indication that this scandal translates into a sharp drop in car sales in the coming months is likely to have significant implications for the German economy."

Fitch Ratings has placed Volkswagen on 'Rating Watch Negative' following the news, citing the effect of the scandal on the corporation's brands and financial impact of potential fines, recall costs, lawsuits and legal claims.