VW's Conciliator-in-Chief Must Now Pry Open an Insular Culture

  • Chairman Poetsch must fix relations with customers, regulators
  • `It’ll be tough for him to really make a fresh start'

Hans Dieter Poetsch has ridden his skills as a behind-the-scenes conciliator to the chairmanship of Volkswagen AG. Now, as the company’s scandal over cheating on emissions tests continues to spread, he’s being thrust into an unfamiliar role as the company’s guiding force.

Poetsch must repair VW’s reputation with consumers, defend it against growing scrutiny from regulators, and push through tough reforms to foster greater transparency at a company famously resistant to change. And he’ll ultimately oversee any decision about whether VW should stick with Matthias Mueller, the chief executive officer appointed just five weeks ago, after revelations that the company misrepresented the performance of more vehicles than it had previously acknowledged.

“The challenge for Mr. Poetsch has gotten harder because the scandal has moved to another dimension,” said Ingo Speich, a fund manager at Volkswagen shareholder Union Investment. “The widening of the scandal shows how important it is to quickly investigate and find out who’s responsible, and to put in place people at the top who aren’t tainted.”

Balanced Board

VW on Tuesday said 800,000 vehicles -- including some with gasoline engines instead of the diesels that have been the focus of probes so far -- emit more carbon dioxide than the company had disclosed. That followed reports on Monday that the U.S. Environmental Protection Agency is expanding its investigation to include Porsches, the division Mueller headed before getting the top job. Last month, the company said it would recall 11 million vehicles fitted with software designed to fool emissions tests.

Poetsch, 64, was chosen to lead the company in September, before the cheating on emissions became public, and held onto the position even as the issue cost then-Chief Executive Officer Martin Winterkorn his job. One of the last survivors of an inner circle that included Winterkorn and former Chairman Ferdinand Piech, Poetsch was seen as a safe bet to guide the company through turbulent times. On Nov. 1, he succeeded Winterkorn as CEO of Porsche Automobil Holding SE, the company owned by the founding families of Porsche, which controls VW.

German supervisory boards have the mandate to hire and dismiss key executives and sign off on major strategic decisions. The panel is split equally between company loyalists and major shareholders on the one hand, and labor representatives on the other hand to assure a balance of interest. After Tuesday’s revelations, the board sent out a terse statement, saying it’s “deeply concerned” by the disclosure and announced the likelihood of “further measures and consequences.”

New Year’s Waltz

Poetsch “has been part of the very centrally controlled Volkswagen system for many years,” said Stefan Bratzel, director of the Center of Automotive Management at the University of Applied Sciences in Bergisch Gladbach, Germany. “It’ll be tough for him to really make a fresh start.”

An industrial engineer from Austria, Poetsch can be found most years in the front rows of the Vienna Philharmonic Orchestra’s waltz-filled New Year’s Day concert. Insiders say he has a calm demeanor that has helped him get through three explosive management reshuffles in a dozen years.

He joined Volkswagen as its chief financial officer in 2003 after stints as CEO of car parts supplier Duerr AG and chief controller at BMW AG. He preferred to stay in the background, leaving center stage to Piech and Winterkorn, both famous for obsessing over engineering details and notorious for gruff responses to perceived shortfalls.

Worker Parties

By contrast, Poetsch typically responds to confrontation with a flood of financial details rather than lose his cool, said two people who’ve attended board-level meetings with him. The former CFO survived Piech’s expulsion of the CEO who hired him, Bernd Pischetsrieder, in 2006. And he remained untainted by a scandal involving Volkswagen worker representatives partying on the company’s tab.

He gained the trust of Piech and the rest of the controlling family by negotiating a successful conclusion to a seven-year takeover saga that saw VW gain control of Porsche’s carmaking business in 2012. Poetsch’s complex structure for the deal cut what could have been a 1 billion-euro tax bill down to slightly more than 100 million euros.

The maneuvering also protected the Porsche clan’s majority holding in the company, helping repair relations between family members who had been on opposite sides of the takeover fight.

“He has steered a highly complex company through a number of extraordinary processes,” said Juergen Pieper, an analyst with Bankhaus Metzler in Frankfurt. “He’ll need to draw on his knack for mediating between different parties and strong
personalities to get through this crisis.”

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