Volkswagen: Das Auto Scam

RECOMMENDATIONS OF THE VOLKSWAGEN SUPERVISORY BOARD

With the information currently available the Supervisory Board recommended the immediate suspension of some employees. This process is already underway. While Matthias Müller will lead the Volkswagen Group going forward as the new CEO of Volkswagen AG, the Supervisory Board resolved to propose to the Extraordinary Meeting of Shareholders on November 9, 2015 to elect Hans Dieter Pötsch as a member of the Supervisory Board. The Supervisory Board intends to subsequently elect him as its Chairman.

Berthold Huber, Deputy Chairman of the Supervisory Board, said: "The test manipulations are a moral and political disaster for Volkswagen. The unlawful behaviour of engineers and technicians involved in engine development shocked Volkswagen just as much as it shocked the public. We can only apologise and ask our customers, the public, the authorities and our investors to give us a chance to make amends." The Supervisory Board today commissioned an American law firm to assist in further clarification and in preparing the necessary steps.

The Supervisory Board of Volkswagen AG approved a new management structure for the Group and the brands as well as for the North America region on September 26, 2015 in Wolfsburg, Germany. The interim Chairman of the Supervisory Board, Berthold Huber, commented: "The new structure strengthens the brands and regions, gives the Group Board of Management the necessary leeway for strategy and steering within the company, and lays a focus on the targeted development of future-oriented fields."

Reorganisation of the North America region / Successor Prof. Vahland

The Supervisory Board decided on the reorganisation of the Group's activities in North America. The markets in the USA, Mexico, and Canada will be combined and significantly strengthened to form a new North America region. Effective November 1, the Group's activities in the region will be led by Prof. Dr. Winfried Vahland (58), formerly Chairman of the Board of Directors at Škoda, who in this new role becomes a member of the Volkswagen brand Board of Management. Prof. Vahland's successor as Chairman of the Board of Directors at Škoda will be Bernhard Maier (55), until now Board Member for Sales and Marketing of Porsche AG. Michael Horn (52) remains President and CEO of Volkswagen Group of America.

Porsche brand group with Bentley and Bugatti

At Group level the management structure will be oriented even more systematically to the modular toolkits. These toolkits feature standardised technical components for each automotive vehicle segment (volume, premium, sport and commercial vehicles). Consequently, a Porsche brand group with Bentley and Bugatti will be established for the sportscar and mid-engine toolkit. The toolkit strategy will come under the even closer guidance of the Group CEO; a separate department will be set up for this purpose. The Audi brand group with Lamborghini and Ducati will be continued as will the Truck Holding, and the Power Engineering and Financial Services business lines. The volume brands Volkswagen (with principal responsibility for the modular transverse toolkit), SEAT, and Škoda will be represented by one member each in the Group Board of Management.

New Group functions for efficiency and future-oriented fields

Group functions will concentrate more closely on efficiency and future-oriented fields; organisational units, for example for Group product strategy, new business fields, cooperations and holdings, connected car activities, and CO2 steering, will therefore be set up. According to Huber, "new, strong Group functions, such as for standardization and harmonized production processes, will lay the timely foundations for efficient decision-making. We will become faster and more agile." Furthermore, a Chief Technology Officer will analyze and, if necessary, co-steer technical developments throughout the Group as mandated by the Group Board of Management.

Upgrading of brands and regions

At the same time, existing corporate bodies, structures and processes will be streamlined at Group level, in particular by strengthening the brands and regional accountability. To that end the Volkswagen brand will introduce a management structure with four regions, each led by a local CEO with a direct reporting line to the brand Chairman, Herbert Diess.

Streamlining the Group Board of Management

The production department at Group level, until now led by Thomas Ulbrich in an interim capacity, will be abolished with immediate effect. This is one consequence of delegating responsibility to the brands and regions. Berthold Huber commented: "Going forward, the brands and regions will also have greater independence with regard to production. So it follows that they should also hold the responsibility for these activities."

The interim Supervisory Board Chairman emphasised that "one key point is that we are scaling back complexity in the Group. In recent weeks, we have already undertaken important steps such as separating Group and brand functions." He said the developments of the last few days had underscored the urgency of this project: "We will not lose any time. The new management model will be implemented at the beginning of 2016." This would bring the Board greater freedom to address urgent issues concerning Group strategy, development and steering.

Further Board of Management changes

The Supervisory Board extended the contract with Francisco Javier Garcia Sanz (58), Member of the Board of Management of Volkswagen Aktiengesellschaft with responsibility for Procurement, by five years.

Christian Klingler (47), member of the Board of Management of Volkswagen Aktiengesellschaft with responsibility for Sales and Marketing and member of the Volkswagen brand Board of Management with responsibility for Sales and Marketing, is leaving the company with immediate effect as part of long-term planned structural changes and as a result of differences with regard to business strategy. This is not related to recent events. The new CEO Matthias Müller will head the Sales department at Group level in an interim capacity until further notice.

Jürgen Stackmann (54), previously Chairman of SEAT, will take over Christian Klingler's function as a member of the Volkswagen brand Board of Management. Stackmann is succeeded by Luca de Meo (48), currently Audi AG Board of Management member for Sales and Marketing. These personnel changes become effective from October 1.

5 million Volkswagen passenger cars affected in emissions scandal

An internal evaluation in the Volkswagen Group has revealed that approximately five million Volkswagen Passenger Cars brand vehicles are affected worldwide. In total around 11 million cars from the Group has been affected. Certain models and model years of these vehicles (such as the sixth generation Volkswagen Golf, the seventh generation Volkswagen Passat and the first generation Volkswagen Tiguan) are equipped exclusively with type EA 189 diesel engines.

As previously announced, all new Volkswagen Passenger Car brand vehicles that fulfill the EU6 norm valid throughout Europe are not affected. This therefore also includes the current Golf, Passat and Touran models, a press statement from the company said.

Dr. Herbert Diess, CEO of the Volkswagen Passenger Cars brand stressed, "We are working at full speed on a technical solution that we will present to partners, to our customers and to the public as swiftly as possible. Our aim is to inform our customers as quickly as possible, so that their vehicles comply fully with regulations. I assure you that Volkswagen will do everything humanly possible to win back the trust of our customers, the dealerships and the public."

The Volkswagen Passenger Cars brand will inform all markets worldwide how many of vehicles are affected locally. We are working intensively on remedial measures in close coordination with the certification authorities. The vehicles are and remain technically safe and roadworthy, the release concluded.

Volkswagen to refit diesel vehicles with EA 189 EU5 engines

Volkswagen announced its action plan to correct the emissions characteristics of diesel vehicles. Under the action plan, Volkswagen and the other Group brands whose vehicles are affected will present the technical solutions and measures to the responsible authorities in October. Customers with these vehicles will be kept informed over the coming weeks and months. All of the Group brands affected will set up national websites to update customers on developments.

“An internal evaluation on Friday (September 25, 2015) established that a service procedure is required for some five million vehicles from the Volkswagen Passenger Cars brand out of a total eleven million Group vehicles worldwide. These vehicles from certain models and model years (such as the sixth generation Volkswagen Golf, the seventh generation Volkswagen Passat or the first generation Volkswagen Tiguan) are fitted with Type EA 189 diesel engines,” the statement from Volkswagen read.

VW scam will lead to enormous financial damages, says Muller of VW Group

Admitting that the recent emissions scam committed by the Volkswagen Group will lead to enormous financial damage which “it is still not possible to quantify as of today”, the new CEO of Volkswagen Aktiengesellschaft, Matthias Müller, told a large gathering of VW workers that he would provide a "swift and relentless clarification" of the emissions scandal. He admitted that he, too, did not yet have the answer to many questions.

Muller was speaking at a works meeting in Wolfsburg on October 6, 2015. He said that what had happened went against everything the Group and its people stand for and that there was no excuse. "We can and we will overcome this crisis, because Volkswagen is a group with a strong foundation. And above all because we have the best automobile team anyone could wish for,"  he said, assuring the workers that the company would do everything it could to ensure that Volkswagen continues to stand for good and secure jobs in the future.

The recently appointed CEO of Volkswagen Group who replaced Dr Winterkorn was speaking to more than 20,000 employees at the Wolfsburg plant. "Apart from the enormous financial damage which it is still not possible to quantify as of today, this crisis is first and foremost a crisis of confidence. That is because it is about the very core of our company and our identity: it is about our vehicles," he said.

"Our most important task will therefore be to win back the trust we have lost – with our customers, partners, investors and the general public. Only when everything has been put on the table, when no single stone has been left unturned, only then will people begin to trust us again," Müller said.

The CEO asked employees for their understanding, saying that he, too, did not yet have the answer to many questions. "Believe me – like you, I am impatient. But in this situation, where we are dealing with four brands and many model variants, care is even more important than speed," he said.

Nevertheless, he announced that a project team had drawn up an action plan. Over the coming days, the customers affected would be informed that the emissions characteristics of their vehicles would be upgraded. Furthermore, the company has set up websites where customers can check whether their vehicles are affected by entering the chassis number. The company will shortly be presenting the technical solutions to the responsible authorities – in particular the German Federal Motor Transport Authority (KBA) – for approval. Müller said, "In many instances a software update will be sufficient. Some vehicles, however, will also require hardware modifications. We will keep our customers constantly informed about the measures and arrange workshop appointments."

The Group CEO also emphasised that all of the vehicles in question are technically safe and roadworthy. "At no time was the safety of our customers compromised. And above all: all EU6 diesel vehicles comply with legal specifications and environmental requirements. For Wolfsburg, that means production can continue," he noted.

On the other hand, Müller did not omit mentioning that "while the technical solutions to these problems are imminent, it is not possible to quantify the commercial and financial implications at present." He added that the company must now respond swiftly: "That is why we have initiated a further critical review of all planned investments. Anything that is not absolutely necessary will be cancelled or postponed. And it is why we will be intensifying the efficiency program. To be perfectly frank: this will not be a painless process." However, he also gave employees reassurance: "We will do everything we can to ensure that Volkswagen continues to stand for good and secure jobs in the future."

Müller added: "At the IAA we demonstrated that the Volkswagen Group is well positioned when it comes to the key technologies of the future. We cannot afford to jeopardize this strong position now. We must make massive savings to manage the consequences of this crisis. At the same time, though, we cannot afford to economise on the future. That is something else we will also be addressing over the coming weeks and months."

Müller pointed out that not all the facts were on the table yet. One conclusion, however, was already clear: "Volkswagen must once again stand for more integrity. Not just on paper. But anytime, anywhere. We will make every effort to make very sure that the rules are respected by everyone. This Group and its brands stand for sustainability, for responsibility, for credibility. At the moment, much of that seems to have been deeply shaken. But: together with you, I am determined to prove that our values remain our guide. And that Volkswagen, that each one of us, deserves the trust of people everywhere."