VW's German Union Supports CEO's Efforts to Solve Diesel Crisis

  • 'There is no alternative to Mueller,' IG Metall chief says
  • VW brand overhauls development to boost 'responsibility'

Volkswagen AG’s powerful German labor union backed Chief Executive Officer Matthias Mueller’s handling of the diesel-emissions scandal, easing pressure on the executive after he sparked a media storm in the U.S. last week.

“The impression Mueller makes is that he’s working on solving the problems in a very serious and result-oriented way,” Joerg Hofmann, head of Germany’s largest union, IG Metall, and a member of Volkswagen’s supervisory board, said Wednesday in Frankfurt. “There is no alternative to Mueller. The question about an alternative is unfounded.”

Hofmann attended a Tuesday meeting between the CEO and supervisory board leaders. At the gathering, Mueller confirmed that he believes the company breached legal codes and overstepped ethical boundaries when it cheated on diesel emissions, a company spokesman said. Hofmann said many topics were discussed at the meeting, not just Mueller, who took charge about four months ago in the wake of the scandal.

The CEO drew criticism after telling a National Public Radio interviewer that Volkswagen “didn’t lie” when first asked about irregularities between real-life and test emissions in its diesel cars. In a follow-up interview, Mueller apologized and blamed his initial statements on noisy surroundings. The comments came before Mueller’s first meeting with U.S. regulators in the four-month-old crisis.

Volkswagen has been struggling to find a path out of the scandal in the U.S., where so far it’s failed to get regulatory approval for a fix for diesel cars it rigged to pass emissions tests. The company admitted last September that it had deceived consumers and regulators since 2009 in a scandal involving 11 million vehicles worldwide. A recall in Europe for most of the vehicles has been approved.

Development Shift

As part of an effort to show such deceit can’t happen again, VW’s namesake brand announced plans on Wednesday to reorganize vehicle development. The new organization makes teams responsible for vehicle types from concept through end of production.

“We have to ensure that the corporate responsibility for each vehicle project is clearly assigned,” Herbert Diess, chief of the VW brand, said in a statement. “This step represents a core element of ‘New Volkswagen’.”

The four teams will oversee development of small cars, compacts, mid- and full-size autos and battery-powered vehicles. The reorganization aims to make the brand more nimble as part of a push to rein in expenses to offset the costs related to the scandal, with burdens from regulatory fines and lawsuits unresolved.

“VW is a company that has partially lost control of its own future,” Michael Tyndall, an analyst with Citigroup, said in a note. “We suspect VW will remain in the headlines for the wrong reasons throughout 2016.”

The shares fell 2.3 percent to 107.60 euros at 3:19 p.m. in Frankfurt. Volkswagen has lost almost 20 billion euros ($21.8 billion) in value since the scandal broke in September.

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