Volkswagen Names Matthias Müller, an Insider, as CEO

26 Sep 2015 | Author: | No comments yet »

VW seeks new CEO to help it recover from scandal.

FRANKFURT — Volkswagen on Friday tried to come to terms with the emissions cheating scandal that has threatened to cripple one of the global automobile industry’s biggest corporations, naming Matthias Müller, the head of the company’s Porsche unit, as chief executive. “The same thing must never happen again,” Mr.The 20-person supervisory board began its meeting on Friday morning to vote on naming Mr Mueller, a company veteran for four decades who enjoys the support of the family that controls VW as well as the automaker’s influential union leaders, sources said.

BERLIN (AP) — Volkswagen’s supervisory board is meeting Friday to discuss who to name as CEO after Martin Winterkorn quit the job this week over an emissions-rigging scandal that’s rocking the world’s top-selling automaker. The company is also expected to announce the departure of top executives in a sweeping overhaul to begin repairing the carmaker’s image tarnished by rigged emissions tests. He promised to overhaul the company’s governance, which has often been criticized for being unwieldy — and for somehow allowing software designed to deliberately trick diesel air-quality tests to be installed on 11 million cars worldwide.

The 62-year-old takes charge as Volkswagen seeks to regain the trust of consumers and regulators after admitting to rigging engines to circumvent pollution controls. Does it go for a seasoned insider who knows the VW Group and its many brands inside-out or an untainted outsider with a track record for turning companies around? The crisis wiped about €20 billion off VW’s market value this week, forcing chief executive officer Martin Winterkorn to step down on Wednesday as the scandal widened and opened the door for the exit of other top managers. VW is in the midst of probably its biggest crisis ever, its reputation for trustworthiness in tatters following last week’s disclosure that stealth software was used in its diesel cars to dupe U.S. testers.

Müller, said during the news conference that the scandal was “a moral and political disaster.” Since moving into the top job at Porsche in 2010 after its takeover by Volkswagen, Mr. Audi development chief Ulrich Hackenberg and Porsche development head Wolfgang Hatz are among those who will leave, sources said.Mr Hackenberg, a confidante of Mr Winterkorn’s, was previously responsible for VW brand development and Mr Hatz ran motor development. Winterkorn, who had been CEO since 2007, said he took responsibility for the “irregularities” found by U.S. inspectors in VW’s diesel engines, but insisted he had personally done nothing wrong. VW’s supervisory board will be hoping that its decision on Winterkorn’s successor will help the car company contain the scandal and restore its business and brand.

Volkswagen sales in China, the company’s biggest single market, have been slowing, and they have been plummeting in Brazil, another important country. To repair VW’s image, Mr Mueller will have to move quickly to get into the public’s eye – a task better suited for his cool, cosmopolitan demeanour than that of the stiff and autocratic Mr Winterkorn. “For the next 12 months or so, he’ll be a problem-solver who’ll have to credibly drive this process internally and represent it publicly,” said Juergen Pieper, a Frankfurt-based analyst at Bankhaus Metzler.

The company’s market share in the European Union slipped to 26.5 percent in August from 28.1 percent a year earlier, though Volkswagen still has more than double the share of any competitor. Others think it may be better for the company if it looked for talent outside, partly because internal candidates could be seen as compromised purely by the fact they were present at the time of the scandal. Analysts and ratings agencies say the emissions scandal is likely to cost Volkswagen much more than the 6.5 billion euros, or $7.3 billion, the company has set aside to cover the cost of recalls and other expenses.

As Porsche boss, he attended classic-car events to connect with purists and justify expanding into mainstream segments with models like the Macan compact SUV. Jason Hanold, managing partner of Evanston, Illinois-based executive search firm Hanold Associates, said VW would be “spoiled for choice” if it decides to look outside company for its next CEO. To succeed he’ll also have to dismantle “fortress Wolfsburg,” Mr Pieper said, referring to the automaker’s centralised oversight, which funnels decisions through its headquarters. “The challenge will be how to break up a bureaucratic culture, so that people can speak up when there’s a problem, even if it means they won’t meet a deadline and they won’t make market share,” said Lynn Wooten, associate dean at the University of Michigan’s Ross School of Business.

The drain on profits will make it harder for Volkswagen to deliver on a promise — delivered with much fanfare at the Frankfurt auto show last week — to expand its fleet of hybrid and all-electric vehicles. Volkswagen’s need for new ways to reduce fuel consumption and greenhouse gases is even more urgent now that its “clean diesel” strategy is in tatters. The state government, along with Volkswagen’s powerful worker representatives, has an interest in maximizing employment, sometimes at the expense of profit. Müller, who studied machine tool making and later information technology, has worked at Volkswagen since 1977, primarily in the company’s Audi unit, based in the Bavarian city of Ingolstadt.

Our engines meet and adhere to every legal requirement.” But a scandal in which selling cars seemed to take precedence over environmental laws has made the industry, or at least Volkswagen, an inviting target. As the Volkswagen supervisory board met inside the company’s vast complex in Wolfsburg on Friday, members of Greenpeace arrived to protest, bringing with them three black Volkswagen Golfs.

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