Volkswagen's emissions crisis could be Germany's version of the LIBOR scandal
US regulators revealed on Friday that the colossal car manufacturer had submitted false emission data for its diesel cars. That could lead to a fine of as much as $18 billion (£11.65 billion).
That assumes the problem is confined to the US - other regulators around the world are now announcing their own investigations.
CEO Martin Winterkorn is out - his last day is September 25. German media reports say Porsche CEO Matthias Muller is lined up to replace him.
This is big, not just for Volkswagen, but for the car industry in general - and few countries attach more pride or national importance to their auto production than Germany.
As Volkswagen tumbles, so have other companies. Porsche is down by more than 30% since September 17, Daimler by 15%, and BMW by 10%.
That's a major slump that shows the concern isn't just specific to Volkswagen. If this can happen to Volkswagen, could it happen to other major car producers too?
Over at Forbes, Frances Coppola notes that the scandal has a whiff of LIBOR about it:
For me, this looks uncannily like the Libor-rigging scandal in the banks. Barclays was the first to be exposed, and its CEO, Bob Diamond, took the fall: but as we now know, it was certainly not the last or even the biggest sinner. I would not be surprised if emissions test rigging turned out to be widespread practice among motor manufacturers.
The LIBOR scandal began over accusations of rate-rigging by major banks, by moving a key inter-bank lending interest rate (the London Interbank Offered Rate) by fractional amounts to profit on particular trades. The scandal began with Barclays, but half a dozen other institutions eventually got major fines.
Arndt Ellinghorst, head of global automotive research at Evercore ISI, thinks there are good reasons to believe that the crisis won't spread beyond VW, because US diesel emission standards are particularly tough, but notes that that won't stop people searching:
For years there have been unfounded stories circulating that certain OEMs [original equipment manufacturers] may have submitted vehicles with different ECU calibrations for road and other tests. VW's woes will likely lead to closer examination going forward not to mention several witch hunts.
What's more, the emissions scandal comes at an awkward time for major German exporter firms in general - the country has benefitted more than anywhere else in Europe from surging Chinese demand in recent years, with the emergence of an upper-middle class now able to buy cars.
Volkswagen's share price surged to over €250 during the QE and recovery-driven equity rally earlier in the year, but it's now slumped to just over €100, a decline of 58% since early April.
For some perspective on that collapse, analysts at Bernstein research noted that BP's share price only fell 55% during the Deepwater oil spill.