VW staff, supplier warned of emissions test cheating years ago -reports

28 Sep 2015 | Author: | No comments yet »

VW faces Swiss ban on diesel car sales.

Switzerland is considering banning the sale of diesel cars made by Volkswagen in the wake of the emissions rigging scandal that is rocking Europe’s biggest car maker.(Bloomberg) — Matthias Mueller pressed the Volkswagen AG board to move ahead with a reorganization he helped devise before the carmaker was caught up in an emissions-cheating scandal, as the new leader seeks to put his stamp on the company.

As a result of the diesel emissions scandal, which forced Martin Winterkorn to resign, VW faces a welter of legal sanctions and civil lawsuits, 11 million diesel vehicles that don’t meet emissions standards, as well as the looming risk that consumers will boycott its vehicles. The ban, by the Swiss Federal Roads Office, would be on all Volkswagen group cars with diesel engines that contain software designed to cheat pollution controls and includes its VW, Audi, Skoda and Seat brands.

The former Porsche boss wanted the new strategy to remain on the agenda of the Friday meeting in Wolfsburg, Germany, according to a person familiar with Mueller’s thinking, who asked not to be identified because the discussions were private. The Swiss estimate that around 180,000 Volkswagen group vehicles already on its roads could contain the software which reduces pollution levels during testing. Indeed, the episode recalled another at VW a decade ago when a senior VW human resources executive was caught and convicted for bribing German union officials. These cars, which were built between 2009 and 2014, could be subject to a recall if they were found to contain the manipulation software, Mr Rohrbach said. Volkswagen said Friday that more authority will be given to individual brands and regions, a departure from the centralized structures that kept key decisions in Wolfsburg and the chief executive officer’s inner circle.

Sales of new vehicles of this type would be banned, but the prohibition wouldn’t extend to the cars already on the roads or vehicles with the newer EURO6 emissions standard. Muller should consider acknowledging, however, that those who acted improperly may have done so from a misguided perception from senior executives of what VW views as acceptable or expected behavior – for which VW management bears responsibility and which VW will change.

The move would be the latest blow for Wolfsburg-based Volkswagen that has lost around a third of its market value since the emissions-testing crisis emerged. Since male, German engineers dominate VW’s upper echelons, the automaker should consider diversifying its talent pool and accelerate hiring from abroad, recruiting women and non-Germans and promoting them into positions of leadership.

Friday’s meeting, which took place in a newly constructed office building within Volkswagen’s main plant, started before noon and stretched into the evening amid wrangling over who knew what and when. Jason Vines, a former Ford vice president of public affairs during the Ford Explorer/Firestone tire affair, said “culture isn’t immediately changeable, only behaviors. According to the US authorities, roughly 482,000 cars in the country were fitted with software that covertly turns off when driving normally, and turns them on when the car is undergoing an emissions test. An important change for VW would be to give public affairs a seat at the table of management, rather than assigning it the job of cleanup.” If Mueller is to restore VW’s honor, he must convince VW’s three key stakeholders that his actions are vital for the automaker’s prosperity and perhaps, even its survival. Known as a “defeat device”, the feature results in cars emitting up to 40 times the amount of toxic nitrogen oxide emissions than the standards allow.

When the 20-member panel finally dispersed and presented VW’s new CEO, Mueller was flanked by Volkswagen’s power players: Wolfgang Porsche, the head of the family that controls a majority of the company’s voting shares; Bernd Osterloh, the chief representative of Volkswagen’s 600,000 workers; the prime minister of Lower Saxony, Stephan Weil, whose state owns 20 percent of Volkswagen; and Interim Chairman Berthold Huber. Volkswagen has issued a profit warning and disclosed a €6.5 billion ($10.35bn) charge to earnings to cover the costs of addressing the matter, although US fines could be much higher. For this difficult mission, he may need help from the German government: German chancellor Angela Merkel has an incentive to assist, for her political opponents are attacking her this week as being “in bed” with the nation’s car industry.

Mr Muller has vowed to get to the bottom of the affair that has shattered trust in the company. “My most urgent task is to win back trust for the Volkswagen group,” he said. “Under my leadership, Volkswagen will do everything it can to develop and implement the most stringent compliance and governance standards in our industry.” His mission statement was echoed by Osterloh, 59, who said the company needs a new corporate culture that’s more inclusive and avoids a climate in which problems are hidden. The Bentley and Bugatti marques will be grouped with Porsche, while Audi continues to manage the Lamborghini supercar division and Ducati motorcycles. Winterkorn, 68, who had been due to get his contract extended on Friday before the widening scandal, had built a global champion that included subsidiaries ranging from Scania heavy trucks to Ducati motorbikes to Porsche sports cars.

At the same time, key decisions were made at the Wolfsburg headquarters, and Winterkorn was known to get involved in the details, from design to engineering to operations. While his path to the top of Volkswagen isn’t unlike Winterkorn’s — both men are company veterans and worked for years at the Audi unit — they have markedly different styles. Winterkorn was more patriarchal and could come off as gruff, with a growling voice and an imposing frame adding gravitas, while Mueller has a cooler and more cosmopolitan air and has said his management style is more inclusive. Stern-faced and unwilling to answer questions from journalists, Mueller still managed to offer a positive view of the week: the reform of decision-making and accountability could enable Volkswagen “to emerge from this crisis stronger than before,” he said.

To contact the reporters on this story: Chris Reiter in Berlin at creiter2@bloomberg.net; Christoph Rauwald in Frankfurt at crauwald@bloomberg.net To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net Steve Geimann

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