WOLFSBURG, Germany: Volkswagen named company veteran Matthias Mueller as its chief executive yesterday as the German carmaker struggles to get to grips with a crisis over rigged diesel emission tests that its chairman called “a moral and political disaster”.
After a marathon board meeting at its headquarters in Wolfsburg, the world’s biggest carmaker said Mueller, the 62-year-old head of its Porsche sports car division, would replace Martin Winterkorn, who resigned as CEO on Wednesday.
As Mueller took the helm, however, Germany’s transport minister announced the carmaker had manipulated test results for about 2.8 million vehicles in the country, nearly six times as many as it has admitted to falsifying in the United States, pointing to cheating on a bigger scale than previously thought.
Volkswagen, for generations a model of German engineering prowess, is under huge pressure to take decisive action over the biggest business-related scandal in its 78-year history.
“Under my leadership, Volkswagen will do all it can to develop and implement the strictest compliance and governance standards in the whole industry,” Mueller said in a statement.
The company said it would appoint a US law firm to conduct a full investigation, suspend an unspecified number of staff and adopt a more decentralised structure with a slimmed down management board.
But the scandal keeps growing. German transport minister Alexander Dobrindt said on Thursday that Volkswagen had also cheated tests in Europe, where its sales are much higher than in the United States. Yesterday Dobrindt put the number of affected vehicles in Germany at 2.8 million.
Regulators and prosecutors across the world are investigating the scandal, while customers and investors are launching lawsuits. The wider car market has been rocked too, with manufacturers fearing a drop in sales of diesel cars and tougher testing.
Regulators in Europe and the United States said they would take a harder line on enforcing compliance with pollution standards and would be less tolerant of gaps between real world emissions and laboratory results. Volkswagen said on Tuesday that 11 million vehicles worldwide were fitted with the software that allowed it to cheat US tests, while adding it was not turned on in the bulk of them.
Customers and motor dealers are furious that Volkswagen has yet to say which models and construction years are affected, and whether it will have to recall any cars for refits. The task facing Mueller is enormous, with the latest issue of influential German weekly Der Spiegel showing pall-bearers carrying a Volkswagen car decked out as a coffin under the headline “The Suicide”.
“His appointment is a step towards cleaning-up,” said LBBW analyst Frank Biller about Mueller, a former head of product strategy close to the Piech-Porsche family that controls Volkswagen.
Bernstein analyst Max Warburton also questioned whether a man who has spent more than three decades at the company was the right man to signal a break with the past. He urged “big and bold action”, saying the new CEO should offer to buy back and scrap almost 500,000 diesel cars sold in the United States, which would cost about $6bn.
Volkswagen said sales chief Christian Klingler would leave the company, but that US head Michael Horn — also widely tipped to go — would stay. Acting Chairman Berthold Huber apologised to “our customers, the public, authorities and investors” and asked them to give Volkswagen a chance to make good on the damage from the emissions scandal.
“I want to be very clear, the manipulation of tests for diesel engines is a moral and political disaster,” Huber said. Volkswagen will hold an extraordinary shareholder meeting on November 9 in Berlin to approve its proposed changes.
Frank Schellenberg, a taxi driver in Wolfsburg where the carmaker employs around 70,000 people, said locals felt betrayed and feared the worst.
“They have lost any contact with the real world, the customers who have been buying their cars in good faith,” he said, pointing to the firm’s 13-storey administrative building. “Everyone in Wolfsburg is expecting tough times and job cuts.” Reuters
Paris: Volkswagen’s pollution cheating scandal has unleashed criminal and regulatory investigations around the world, slashed billions of euros off its stock market value and topped the chief executive. The world’s biggest car maker by sales in the first half of this year has admitted fitting some 11 million diesel engine automobiles with software capable of fooling official pollution tests.
Following are the key actions taken since the Volkswagen scam was first revealed by the US authorities on September 18.
UNITED STATES: The US has made broadest response so far. The US Environmental Protection Agency (EPA) has referred the affair to the Justice Department, which has opened a criminal investigation and is “working closely with the EPA”. The EPA probe could lead to a fine of $18bn.
VW said it had also received notice of an investigation from the California Air Resources Board, and two Republican lawmakers announced an upcoming congressional hearing on the issue. An additional, serious threat might come from class-action lawsuits by VW owners in the US and elsewhere, for example.
MEXICO: Authorities are checking whether VW violated Mexican emissions standards, the environment minister said, amid concerns over the possible consequences for a local VW factory.
EUROPEAN UNION: The EU urged its 28 member states to investigate whether vehicles comply with European pollution rules. A statement from Industry Commissioner Elzbieta Bienkowska called on national authorities to “ensure that EU pollutant emission standards are scrupulously respected.”
BRITAIN: The Vehicle Certification Agency is working with automakers “to ensure that this issue is not industry-wide,” Transport Secretary Patrick McLoughlin said. “As part of this work, they will re-run laboratory tests where necessary and compare them against real world driving emissions.”
FRANCE: Finance Minister Michel Sapin called for a Europe-wide probe, saying that it might be necessary to check cars made by other European carmakers as well to reassure the public. Spot checks of several brands are planned, beginning with VW models.
GERMANY: In VW’s home country, Transport Minister Alexander Dobrindt has instructed the Federal Motor Transport Authority “to immediately have specific and extensive tests conducted on all Volkswagen diesel models by independent experts.”
ITALY: The transport ministry said it will open an inquiry and demand explanations from the German auto giant. The ministry said it needs to know if similar diesel-equipped VW cars were sold in Italy.
NORWAY: The country’s economic crimes unit has opened a probe to see if VW cars sold there were equipped with pollution test thwarting software. In neighbouring Sweden, the Nordic region’s biggest bank, Nordea, has barred its traders from buying VW shares and bonds for six months owing to the scandal.
INDIA: The government has instructed the Automotive Research Association of India (ARAI) to inspect VW cars and see if the cars sold there were the same as in the US and whether they had the same software.
SOUTH KOREA: Environmental authorities questioned VW officials about the affair, and the country plans to test emissions of three VW models starting in mid-October. The environment ministry estimates that around 59,000 vehicles equipped with the software are now on the road in South Korea. AFP
