Last Updated Sep 23, 2015 6:05 PM EDT
Volkswagen CEO Martin Winterkorn stepped down on Wednesday, expressing confidence the world's largest carmaker and Germany's biggest company would overcome a growing emissions crisis that has left its reputation in tatters.
Resigning after nearly a decade at the helm, the 68-year-old Winterkorn said he was "stunned that misconduct on such a scale was possible." The decision to depart came, he said, "even though I am not aware of any wrong doing on my part. Volkswagen has been, is and will always be my life."
Winterkorn's striking fall from favor began Friday with news VW had outfitted nearly 500,000 diesel vehicles sold in the U.S. with software that bypassed air pollution controls, then covered it up to the Environmental Protection Agency for almost a year. The German government on Monday said it would probe whether Volkswagen had engaged in similar conduct in Europe.
On Tuesday, Volkswagen disclosed as many as 11 million cars worldwide were affected, and it set aside $7.3 billion to cover the damage.
The EPA has said Volkswagen could face up to $18 billion in fines. Other countries, such as South Korea, have also ordered investigations into emission levels of VW cars and class actions have already been filed in the U.S.
On Monday and Tuesday, the Wolfsburg, Germany-based company's stock fell 35 percent, shaving $22 billion from VW's market value. It recovered modestly in European trading on Wednesday.
"The pressure on the company -- including from the German government and the share price decline -- was just too high," Klaus Breitenbach, a Frankfurt-based analyst at Baader Helvea Equity Research said of the events leading up to Winterkorn's resignation.
Winterkorn accumulated a $32 million pension before his resignation, and could get millions more in severance, contingent on how the supervisory board labels his departure, according to Volkwagen's 2014 annual report.
Observers, including Breitenbach, question Winterkorn's contention that he had no knowledge that Volkswagen had intentionally designed software to bypass standards for air pollution.
"Winterkorn was known for his attention to detail. It's difficult to understand how he did not know what was going on," Breitenbach said.
"Even if you give Winterkorn the benefit of the doubt, he should have known," Thomas Donaldson, a professor of legal studies and business ethics at the Wharton School at the University of Pennsylvania, said. "From a man renowned for attention to detail, and a company itself known for highly centralized decision making, it's hard to think he didn't know."
Winterkorn's resignation will almost certainly is likely to be followed by other departures, Donaldson said: "Heads almost have to roll at Volkswagen. You don't pull off something like this without cooperation."
VW's supervisory board will discuss Winterkorn's replacement on Friday, the same day it had been scheduled to take up his contract extension. Board member Berthold Huber said any decisions would be announced after the meeting.
Likely candidates include Matthias Mueller, the head of the company's Porsche sports car business who has the backing of the family that holds a majority stake in VW, and former BMW executive Herbert Diess, who has headed the VW car brand since July.
"Whoever steps in to replace Mr. Winterkorn can't be envied -- I don't think the way out is visible at this point," Donaldson said. "Right now, the disaster is shrouded in fraud."
Beyond any financial hits, the damage to Volkswagen's reputation could be even more difficult to repair.
"The first step is to provide a convincing explanation for what happened. First it was half a million, now it's 11 million vehicles with defeat devices -- VW doesn't have a narrative," Donaldson said.
The company also needs to let customers know what it intends to do to fix the damage and compensate those harmed by its foul play. Donaldson suggested offering to repurchase the affected cars would be one way to begin.