VW to pick new boss to tackle emissions scandal

Cars parked at the logistics park of German auto giant Volkswagen in Villers-Cotterets on Sept 25, 2015.
Cars parked at the logistics park of German auto giant Volkswagen in Villers-Cotterets on Sept 25, 2015.PHOTO: AFP

WOLFSBURG, Germany (Reuters) - Volkswagen is expected to name Matthias Mueller, the head of its Porsche division, as chief executive on Friday and purge other managers to show it is acting decisively to end a crisis over its rigging of US diesel emission tests.

The 62-year-old company veteran will be chosen at a supervisory board meeting to replace Martin Winterkorn, who resigned on Wednesday and said VW needed a fresh start, a source close to the matter told Reuters.

The board, meeting at the German carmaker's Wolfsburg headquarters, will also dismiss the head of its US business and two top engineers, a senior source said. Another said VW brand development chief Heinz Jakob Neusser would be fired too.

The world's largest automaker is under pressure to show it is can get to grips with the biggest business-related scandal in its 78-year history.

Volkswagen shares have plunged as much as 40 per cent, wiping tens of billions of euros off its market value, since US regulators said on Friday it had admitted to programming diesel cars to detect when they were being tested and alter the running of their engines to conceal their true emissions.

The scandal has spread, with Germany's transport minister saying on Thursday the company had also cheated tests in Europe - where its sales are much higher than in the United States - and regulators and prosecutors across the world investigating.

The wider car market has been rocked, with manufacturers fearing a drop in sales of diesel cars and tighter regulations, while customers and dealers are furious that Volkswagen has yet to say whether it will have to recall any cars.

"VW needs to be very open about what has happened, how it was possible that this could happen to make sure that this never happens again in the future," said a leading VW shareholder, underlining the importance of the meeting. "These are priorities that should override all other considerations at the moment."

The task facing Mueller, if his selection is confirmed, is enormous. The company said on Tuesday some 11 million vehicles worldwide were fitted with the software that allowed it to cheat the U.S. tests.

Analysts hope that on Friday it may at last say which models and construction years are affected, and whether cars will need to be refitted.

They also expect it to announce a full investigation of the scandal, to be carried out by an external firm, and to give the outlines of a new management structure likely to be less centralised, but with a clearer system of checks.

NEED TO BE "BIG AND BOLD"

Volkswagen has long been seen as a symbol of German industrial prowess and the auto industry is one of the country's major employers and a key source of export income.

Chancellor Angela Merkel has urged VW to act quickly to restore confidence as motor dealers and consumers seek more information about the scandal.

Evercore ISI analyst Arndt Ellinghorst said he would welcome the appointment of Mueller, a former head of product strategy and close to the Piech-Porsche family that controls Volkswagen.

"He's good choice, even though he may be seen as a transitionary CEO until another internal candidate such as VW brand CEO (Herbert) Diess has earned their stripes," he said.

But Bernstein's Max Warburton 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 favours Diess, a former research and development chief of rival BMW who was hired to run the VW brand in December.

"VW needs to think big and bold," Warburton said, urging the new CEO to offer to buy back and scrap almost 500,000 diesel cars sold in the United States, which would cost about US$6 billion (S$8.5 billion), as well as suspend the 100 engineers most closely associated with the affected engines and software.

Environmentalists have long complained that carmakers game the vehicle testing regime to exaggerate the fuel-efficiency and emissions readings of their vehicles.

The International Council on Clean Transportation, one of the research groups that helped uncover Volkswagen's deception, has published new data showing carbon dioxide emissions in European road tests were on average 40 per cent higher than the laboratory results advertised in car sales literature.

European politicians on Wednesday voted to speed up a tightening of testing rules.