VW's Billionaire Owners Vow to Back Carmaker's Scandal Recoveryby
Wolfgang Porsche praises CEO for leadership amid scandal
Labor leaders asked family to show commitment to workers
The head of Volkswagen AG’s controlling family broke his silence more than two months after the emissions-cheating scandal erupted, throwing his support behind Chief Executive Officer Matthias Mueller and vowing to protect jobs.
Wolfgang Porsche, head of the family that owns a majority stake in the carmaker, delivered a message of calm to a company rocked by a series of revelations over manipulated vehicles. Addressing about 20,000 employees at Volkswagen’s main factory in Wolfsburg, Germany, he underscored the family’s commitment to the company and said the investigation is the top priority.
“I am of the rock-solid conviction that Volkswagen can weather the situation and emerge even stronger from the crisis,” said Wolfgang Porsche, the grandson of the creator of the Volkswagen Beetle. “No one here is giving into panic.” He was flanked by other supervisory board members who represent the reclusive clan, Louise Kiesling and Hans-Michel Piech, as well as German Economy Minister Sigmar Gabriel.
Union leaders had asked the family to signal their commitment to workers, who face two weeks of forced leave during the Christmas holidays as the crisis begins to affect sales. Labor chief Bernd Osterloh, who has pushed to shield staff by focusing cutbacks on Volkswagen’s model portfolio, hosted the assembly, which was attended by the management board. CEO Mueller has been under fire since models made by the Porsche brand, which he previously led, were implicated in a probe by U.S. regulators.
Not a Passing Storm
Speaking to an audience that overflowed the factory’s massive Hall 11, with several hundred employees following the meeting on screens set up outside, Wolfgang Porsche said the clan supports job security at Volkswagen and thanked the efforts made by Mueller and other managers -- naming VW Brand chief Herbert Diess specifically. Still, the cousin of former Chairman Ferdinand Piech didn’t make light of the challenges facing the carmaker.
“No one can believe that the emissions scandal will pass by like a sudden thunderstorm,” said Wolfgang Porsche, who is chairman of the family investment vehicle Porsche Automobil Holding SE. “Everyone at Volkswagen now needs to act decisively.”
The gathering comes amid mixed news for Volkswagen. Though the company has made progress toward a simpler-than-expected recall of 8.5 million rigged diesel cars in Europe, talks with regulators are still ongoing in the U.S., where hefty fines and more difficult recalls loom. Meanwhile, sales plunged in the U.S., and market share fell in Germany. The ultimate financial impact, which the company has said will total more than 8.7 billion euros ($9.24 billion), is also uncertain.
Standard & Poor’s downgraded Volkswagen’s credit rating on Tuesday for the second time since the crisis became public. “These risks and related costs continue to expand and deepen,” especially after the November revelations of misrepresented carbon-dioxide emissions in Europe, the rating company said.
To show it has enough liquidity to weather the crisis, the carmaker plans to sign a 20 billion-euro bridge loan on Friday, people familiar with the matter said. The banks, led by Citigroup Inc. and UniCredit SpA, will each provide financing of either 1.5 billion euros or 2.5 billion euros, the people said.
Volkswagen shares fell 3.3 percent to 125.80 euros at 3:42 p.m. in Frankfurt. Volkswagen has lost about 11 billion euros in market capitalization since its cheating became public Sept. 18. The lack of clear direction from the company’s dominant shareholder has added to uncertainty.
“The owner families have been very discreet so far amid this unprecedented crisis for the company,” said Yasmina Serghini, a Paris-based analyst for Moody’s. The family’s stance is “an important indicator for the company’s plan to accelerate reforms and improve cost efficiency.”
Wolfgang Porsche’s reticence reflects the complex relations behind the scenes at Volkswagen. The soft-spoken 72-year-old was thrown into the forefront earlier this year, when his cousin Ferdinand Piech resigned after a boardroom battle with then-CEO Martin Winterkorn. Wolfgang Porsche was the last of the company’s power players to weigh in behind Winterkorn in that struggle, holding off on entering the fray until after consulting with other relatives.
The family votes in a block, making consensus building crucial among its 30 to 40 members. They control 52 percent of Volkswagen’s voting stock through Stuttgart-based Porsche Holding. The clan tends to keep a low profile, and most live around the border of Germany and Austria.
The family’s silence had exacerbated insecurity among workers as evidence grows that the emissions manipulation is starting to hurt sales. Volkswagen’s U.S. deliveries dropped 25 percent in November, while the namesake brand’s market share in Germany declined to 21.3 percent last month from 23.6 percent a year earlier.
The carmaker is putting production in Wolfsburg on hold for two weeks over Christmas to avoid bloated inventories. The factory is VW’s largest and one of the biggest car-manufacturing locations in the world. It produced about 840,000 vehicles last year, but sustaining output could be a struggle if demand continues to slide.