VW's New CEO Is Moving Forward With a Strategy Shift

Germany Wants VW Clean-Up Plan by October 7
  • Carmaker seeks to overcome `political and moral catastrophe'
  • New structure pushes more authority to regions, brands

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.

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. Volkswagen had intended to hold off on a reorganization aimed at streamlining decision-making to give the new boss a chance to settle in. But Mueller, who had assisted his predecessor Martin Winterkorn with devising the plan, didn’t want to wait to start making the changes.

Matthias Mueller
Matthias Mueller
Photographer: Krisztian Bocsi/Bloomberg

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. The announcement capped a tumultuous week after the company admitted it rigged some diesel engines to cheat on emissions tests. The revelation cost the company 20 billion euros ($22.4 billion) in market value and prompted Winterkorn to step down.

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.

Documents Withheld

Documents from four years ago that flagged the illegal software was evidently never sent up the chain of command, underscoring the need for external investigators, said another person familiar with the meeting. A Volkswagen representative declined to comment Sunday beyond the statements made Friday about the meeting.

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.

Porsche Holding

Mueller, 62, vowed to do what it takes to fix the company and its tattered reputation. 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. Huber called the crisis a “political and moral catastrophe.”

Still, Mueller’s authority isn’t absolute. Winterkorn remains CEO of Porsche Automobil Holding SE, Volkswagen’s dominant shareholder. His continued role is a contentious issue especially for labor leaders, said a person familiar with the issue. The investment vehicle of the Porsche family moved on Saturday to tighten its control of the automaker by buying shares held by Suzuki Motor Corp. The purchase takes the family’s holding in VW to 52.2 percent from 50.7 percent.

Fines, Lawsuits

Volkswagen set aside 6.5 billion euros in an initial tally of damages, including fixes for the vehicles, potential regulatory fines and lawsuits. The scandal has reverberated across the globe, as authorities consider tighter regulation in the wake of irregularities on emissions affecting 11 million cars from the automaker’s VW, Skoda, Seat and Audi brands.

The company has been asked by Germany’s car regulators to show by Oct. 7 when its vehicles will meet emissions requirements. Volkswagen must provide a schedule for a technical solution, Transport Minister Alexander Dobrindt said Sunday in an e-mailed statement. A plan will be released in the coming days, Peter Thul, a company spokesman, said in a phone interview.

Customer Needs

The changes taking hold include an overhaul of management and new lines of reporting. Mueller had been instrumental in laying out the structure aimed at making the 12-brand group more responsive to customer needs. Volkswagen will create a North American group under Winfried Vahland, the head of the Skoda brand, in an effort to repair its reputation in a market where it has struggled for decades.

The Bentley and Bugatti marques will be grouped with Porsche, while Audi continues to manage the Lamborghini supercar division and Ducati motorcycles. The VW brand will have four regional chiefs who will report to Herbert Diess, the head of the automaker’s largest unit.

Managers Depart

Some managers will no longer be part of the new order. Huber said Volkswagen had suspended some employees, without identifying any by name. Sales chief Christian Klingler will leave the company because of strategic differences. He will be replaced by Juergen Stackmann, the head of the Seat brand, the company said separately on Friday. Luca de Meo, the sales chief at Audi, will succeed Stackmann at the mass-market Spanish unit.

Porsche’s production chief Oliver Blume, 47, is set to succeed Mueller at the Stuttgart-based maker of the 911 sports car, another person familiar with the matter said Saturday.

Trucks, Motorbikes

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.

Some of the changes under Mueller may be more subtle. 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.

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