Long road ahead in VW's journey to win back trust

VW's new boss Matthias Mueller is said to be someone who knows how to use his elbows.
VW's new boss Matthias Mueller is said to be someone who knows how to use his elbows. PHOTO: BLOOMBERG

New CEO promises 'most stringent' compliance, governance standards

WOLFSBURG • Embattled carmaker Volkswagen's new boss, Mr Matthias Mueller, faces a daunting challenge as he tries to steer it out of the wreckage of a widening scandal over pollution test rigging.

Mr Mueller, the former Porsche chief who was appointed chief executive on Friday, said his most urgent task was to win back trust for the company.

"Under my leadership, Volkswagen will do everything it can to develop and implement the most stringent compliance and governance standards in our industry," he said in a statement.

Swiss authorities said late on Friday that they have temporarily banned the sale of Volkswagen vehicles potentially fitted with rigging software.

Mr Mueller had replaced his predecessor, Mr Martin Winterkorn, who resigned over the stunning revelations by US environmental authorities that the German carmaker had fitted some of its diesel cars with software capable of tricking environmental tests - a scam that could lead to fines of more than US$18 billion (S$25.6 billion).

  • 'The Imperturbable' takes the wheel

  • FRANKFURT • Mr Matthias Mueller, head of luxury sports car maker Porsche and who is now taking the steering wheel at scandal-hit Volkswagen, is a man described as "The Imperturbable".

    That quality might serve the 62-year-old well as he takes charge of the carmaker now mired in its deepest crisis ever over a massive emissions test scam.

    Mr Mueller, born in 1953 in the former communist East Germany, had already been tipped to take over VW during a bitter leadership struggle earlier this year between outgoing CEO Martin Winterkorn and his one-time mentor and former supervisory board chief Ferdinand Piech.

    But it was Mr Winterkorn who eventually won that battle, only to fall over the pollution cheating revelations.

    Die Welt dubbed Volkswagen's new CEO as "The Imperturbable", saying he was someone who knows how to use his elbows. "But I don't see it as playing foul, rather as a sign of perseverance," the newspaper quoted Mr Mueller as saying.

    Mr Mueller was appointed CEO at Porsche in 2010, not long after VW had emerged victorious in its tortuous takeover battle with Porsche.

    In March, he presented record annual sales, turnover and profit for the sports car maker.

    In a recent interview with the daily Sueddeutsche Zeitung, Mr Mueller said he saw himself as an "approachable team-player", who tried "to push through his decisions in a collegial and harmonious way" .

    But he added that he could also be "pretty forceful".

    "I don't like it when things are talked to death."

    AGENCE FRANCE-PRESSE

The ban came as the authorities from India to Norway announced new probes, while the US environmental regulator said it would test all diesel car models.

"Today, we are putting vehicle manufacturers on notice that our testing is going to include additional evaluation and tests designed to look for potential defeat devices," said Mr Christopher Grundler, director of the US Environmental Protection Agency's Office of Transportation and Air Quality.

The scale of Volkswagen's deception became clear when the company admitted that 11 million of its diesel cars are equipped with the so-called defeat devices.

The scandal has continued to grow.

France and Britain have announced new checks and the European Union urged its 28 member states to investigate whether Volkswagen vehicles in their countries complied with pollution rules.

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. On Friday, he put the number of affected vehicles in Germany at 2.8 million.

Volkswagen has set aside €6.5 billion (S$10.3 billion) in provisions for the third quarter to cover the potential costs of the disclosures. Ratings agencies have warned that they may cut Volkswagen's credit rating.

Mr Mueller's immediate priority is to clean up the mess in the US, analysts say.

First may come a sustained show of contrition in a US advertising campaign, said one Volkswagen manager, who asked not to be identified. "Humility will be the name of the game," he said.

Volkswagen will hold an extraordinary shareholder meeting on Nov 9 in Berlin to approve its proposed changes.

Mr Herbert Diess, head of the Volkswagen brand worldwide, said on Friday that the company is "working at full speed on a technical solution" to bring the emissions systems into compliance "as swiftly as possible".

But he did not say when the fix would be delivered or offer details on what Volkswagen might do to appease angry customers.

Mr 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. Customers have been buying their cars in good faith," he said.

BLOOMBERG, AGENCE FRANCE-PRESSE, REUTERS

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A version of this article appeared in the print edition of The Sunday Times on September 27, 2015, with the headline 'Long road ahead in VW's journey to win back trust'. Print Edition | Subscribe