- Carmaker confirms CFO Poetsch will take chairman's position
- VW may face "major fines" in U.S., Energy Secretary says
Volkswagen AG said its investigation into rigged diesel engines will probably take months to complete, highlighting the complexity of the scandal that upended the carmaker two weeks ago.
The company set up a five-person committee led by Berthold Huber, interim chairman of the supervisory board. The group will work closely with U.S. law firm Jones Day to unravel how software to cheat diesel-emissions tests was developed and installed for years in millions of vehicles, the Wolfsburg, Germany-based company said Thursday. Volkswagen stuck to a pre-crisis plan that Chief Financial Officer Hans Dieter Poetsch will become the permanent chairman. Frank Witter, 56, head of the financial-services division, will succeed Poetsch as CFO.
The automaker is facing a significant financial impact, including at least 6.5 billion euros ($7.25 billion) it already set aside for repairs and recalls and a U.S. fine that may reach $7.4 billion, according to analysts from Sanford C. Bernstein Ltd. A sales stop in September already put a dent in its U.S. deliveries. The board’s leadership panel met for seven hours on Wednesday night with Chief Executive Officer Matthias Mueller, who was appointed after his predecessor Martin Winterkorn stepped down under pressure last week.
“We’re at the beginning of a long process,” said Olaf Lies, who is economy minister of the German state of Lower Saxony, which owns one-fifth of Volkswagen’s voting shares, and a member of Volkswagen’s investigation committee. “In the end, a series of people will be held accountable, and that doesn’t mean the software developers but those responsible at the senior level.”
Volkswagen postponed an extraordinary shareholders’ meeting that had been planned for Nov. 9, saying “it would not be realistic to provide well-founded answers which would fulfill the shareholders’ justified expectations” by that time.
Some investors have criticized the appointment of Poetsch. Though Volkswagen hasn’t assigned blame for the diesel scandal to the CFO or to ousted CEO Winterkorn, the two were close associates.
“Making Poetsch the chairman at this point while the investigation into the diesel scandal is ongoing isn’t the right way to go about rebuilding trust in the company,” said Ingo Speich, a fund manager at Volkswagen shareholder Union Investment. “Volkswagen needs a strong chairman right now, and he’ll be in a weak position.”
The company is facing an “enormous recall” in the U.S., though it’s still not clear what hardware and software corrections it will use to fix the problem, U.S. Energy Secretary Ernest Moniz said Thursday in an interview in Istanbul.
“Obviously there’s a discussion of fines, of very, very major fines” from the Environmental Protection Agency, Moniz said. The amount of the penalties VW faces is “going to depend upon what corrective actions” the company takes, he said.
Volkswagen’s 600,000-person workforce is starting to feel the impact of the scandal as the carmaker cuts spending in anticipation of fines, recalls and a drop in U.S. sales. September deliveries rose 0.6 percent to 26,141 vehicles, with sales of its top model, the Jetta sedan, dropping 14 percent.
The company cut an extra production shift at one of its biggest engine factories, in Salzgitter, Germany, and froze hiring at its unit that makes car loans.
“The scandal has such magnitude that investigating it properly is going to take a long time,” said Frank Schwope, a Hanover, Germany-based analyst for NordLB. “It’ll take Volkswagen two to three years to get over the hump, and the legal complaints will take even longer.”