Switzerland Considers Banning Volkswagen Diesel Car Sales

26 Sep 2015 | Author: | No comments yet »

Scandal-hit Volkswagen names Porsche boss new CEO.

Embattled carmaker Volkswagen tapped Porsche chief Matthias Mueller Friday to steer it out of the wreckage of a widening scandal over pollution test rigging, as Washington said it would check all diesel cars for devices that fool emissions tests. Volkswagen (VOWG_p.DE) named company veteran Matthias Mueller as its chief executive on Friday 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 automaker 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.

The scale of VW’s deception became clear when the company admitted that 11 million of its diesel cars are equipped with so-called defeat devices that covertly turn off pollution controls when the car is being driven and back on when tests are being conducted. 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. Calling the cheating a “moral and policy disaster”, the company’s supervisory board chief Berthold Huber said the group is now looking to Mueller, who “knows the company and its brands”, to tackle the crisis. Mueller himself vowed that his “most pressing task will be to restore confidence in the Volkswagen Group — through an unsparing investigation and maximum transparency, but also by drawing the right lessons from the current situation”. “We will overcome this crisis,” he said, adding that the carmaker could “emerge stronger from the crisis in the long term” if it learned from its mistakes. “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 Christopher Grundler, director of the US Environmental Protection Agency’s Office of Transportation & Air Quality. An hour before the group announced its new chief, VW shares closed 4.32 percent down Friday at 107.30 euros, after a rout this week in which a third of the company’s market capitalisation — or over 20 billion euros — was wiped off.

He has also been described as someone who knows how to use his elbows, “but I don’t see it as playing foul, rather as a sign of perseverance and mettle”, the daily quoted him as saying. Volkswagen said on Tuesday 11 million vehicles worldwide were fitted with the software that allowed it to cheat U.S. tests, while adding it was not turned on in the bulk of them. While there was no indication that BMW had cheated in pollution tests — something the company strongly denied having done — the report nevertheless shook investors. 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. Norway and India have opened fraud probes, Australia said it was checking to see if it was affected, and Mexico was investigating whether 40,000 VW cars there comply with emissions rules.

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. France and Britain announced new checks and the European Union urged its 28 member states to investigate whether vehicles in their countries complied with pollution rules. VW has set aside 6.5 billion euros in provisions for the third quarter to cover the potential costs of the disclosures, while ratings agencies have warned they may cut Volkswagen’s credit rating, which could increase the company’s financing costs. But Henning Gebhardt, global head of equity at Deutsche Asset & Wealth Management, said Volkswagen had missed an opportunity with its choice of new CEO. “He won’t be able to lead the company for 10 years due to his age alone,” he said. “That means there will be discussions about succession in the foreseeable future again.” 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. Acting Chairman Berthold Huber apologized 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.

On Friday, a Texas state court judge overseeing one of those cases entered a temporary order directing Volkswagen to continue its voluntary suspension of sales of certain 2015 and 2016 diesel models within that state until Oct. 12, when another hearing has been scheduled. But he did not say when the fix would be delivered, or offer details on what VW might do to appease angry customers. “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.” (Additional reporting by Reuters bureaus in Europe, Asia and Americas; Writing by Mark Potter and Joe White; Editing by Gareth Jones and Matthew Lewis)

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