VW Chief Apologizes for Deception on Trip to 'Core Market'

VW CEO: U.S. Is a Core Market
  • CEO Mueller says company is `committed to making things right'
  • Group's 2015 global vehicle sales dropped below 10 million

Volkswagen AG’s chief executive officer said the automaker is sticking to investment plans and continues to view the U.S. as a core market, ahead of critical meetings this week with government officials over its admission that it rigged emission tests on its so-called clean diesel vehicles.

“We are totally committed to making things right,” CEO Matthias Mueller said Sunday in a speech in Detroit before the North American International Auto Show. “We know we deeply disappointed our customers, the responsible government bodies and the general public here in the U.S. I apologize for what went wrong at Volkswagen.”

Matthias Mueller speaks in Detroit, Jan. 10
Matthias Mueller speaks in Detroit, Jan. 10
Photographer: Jewel Samad/AFP via Getty Images

Europe’s largest automaker is in the midst of complex talks with the U.S. Environmental Protection Agency about possible fixes for about 480,000 diesel cars with 2-liter engines. Mueller confirmed Sunday that it may be possible to fix as many as about 430,000 vehicles by adding a newly-developed SCR catalytic converter, though the actual number could vary and depends on the EPA’s approval.

VW set aside 6.7 billion euros ($7.3 billion) for recall costs in the third quarter, but already acknowledged this won’t be enough. The relatively easy and cheap technical solution for some 8.5 million affected cars in Europe didn’t apply to cars in the U.S. because of technical differences and stricter diesel emission rules.

EPA Meeting

Mueller will meet with EPA head Gina McCarthy this week in Washington to try find a way forward. The regulator said last Monday the talks hadn’t produced an acceptable outcome so far.

The CEO’s appearance in Detroit and the planned meetings in Washington are part of his first trip to the U.S. in his new role. The former head of VW’s Porsche sports car brand in September replaced Martin Winterkorn, who was forced out when the manipulation scandal came to light.

Initial feedback from affected U.S. drivers indicates only a relatively small number want to trade in their cars, Volkswagen’s U.S. chief Michael Horn said. This week’s EPA meeting is “predominately a political discussion,” he said, and it’s unclear whether a deal will be reached. The carmaker will broaden a customer compensation program to owners of the larger 3-liter vehicles implicated later in the scandal, he said. They’ll also be offered the same $1,000 in cash and dealership credits.

Volkswagen rose as much as 5.8 percent, the steepest intraday gain since Dec. 9, and was trading up 4.3 percent at 120 euros as of 1:37 p.m. in Frankfurt. The Wolfsburg, Germany-based company has lost about 14 billion euros in market value since the scandal became public in September.

Global sales of the namesake VW brand fell 4.8 percent to 5.8 million vehicles in 2015, the first decline in 11 years, including a 7.9 percent decrease in December. VW brand deliveries dropped 9.1 percent to 30,956 autos that month in the U.S., despite a record year of growth for other companies.

Worldwide Volkswagen group deliveries amounted to 9.93 million vehicles in 2015, sliding below the 10 million mark of the previous year, as the Chinese market slowed and the company’s cheating on diesel emissions deterred customers. Deliveries were also hit by tanking demand in Brazil and Russia.

Mueller reiterated the VW group will add 20 new electric and hybrid cars to its lineup by 2020. The manufacturer is presenting a concept for the hybrid version of its revamped Tiguan compact sport utility vehicle at the Detroit show. Production of an updated and redesigned Tiguan started last week.

VW is investing about $900 million on producing a new mid-size SUV at its U.S. factory in Chattanooga, Tennessee, to better meet tastes of American buyers. VW improved sales in Europe and China in recent years while lagging far behind global rivals in the U.S.

“Volkswagen must further deepen its understanding of the United States,” Mueller said.

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